THE RELATIONSHIP BETWEEN ACCOUNTING PERFORMANCE AND CEO TURNOVER: EVIDENCE FROM INDONESIA

This study provides empirical evidence regarding the usefulness of accounting information in the issue of CEO turnovers. Previous research shows inconclusive results about the relationship between accounting performance and CEO turnover. Moreover the topic of CEO turnover is still rarely examined in nonwestern countries, such as in Indonesia. This study used data on all companies that were identified as having undergone CEO, President Director for Indonesia, turnovers from 1998-2006. Other firms were included as a control sample. The sample used for testing included 140 companies, consisting of 81 companies with turnovers and 59 companies as a control. Final samples were determined after considering the availability of data and the confounding effects in the period observed. Hypotheses were tested using Logit regression because the dependent variable used is a binary variable, with the notation 1 for turnover and 0 for others. The results show that accounting performance had a statistically significant negative influence over the turnover decision. However, turnover did not affect accounting performance.