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Executive turnover in UK firms: the impact of Cadbury

Dedman, Elisabeth (2012) Executive turnover in UK firms: the impact of Cadbury Accounting and Business Research, 33 (1). pp. 33-50.

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This study examines whether the Cadbury Committee recommendations regarding board structure have increased the power of boards to replace poorly performing CEOs. It also looks at whether institutional investors have become more proactive in this regard post-Cadbury. The study employs a comprehensive sample of UK listed firms between 1990 and 1995. Firm performance, CEO ownership and institutional ownership are found to be significantly related to the probability of non-routine top executive turnover. It appears that the managerial labour market is disciplining managers more quickly after Cadbury. However, there is no evidence that this is because boards have become more likely to remove CEOs following poor performance. Neither is any evidence found to support the assertions of institutional investors who claim to be more proactive since Cadbury. It is concluded that neither the Cadbury board structure reforms, nor the professed change in behaviour of institutional investors, has reduced the agency problem of managerial entrenchment in large UK firms.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
Date : 28 February 2012
DOI : 10.1080/00014788.2003.9729630
Depositing User : Clive Harris
Date Deposited : 01 Jul 2019 13:03
Last Modified : 01 Jul 2019 13:03

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