We propose and test a new explanation for forced CEO turnover, and examine its implications for the impact of firm performance on CEO turnover. Investors may disagree with management on optimal decisions due to heterogeneous prior beliefs. Theory suggests that such disagreement may be persistent...

We study the role of a company founder in its internal governance. Using a sample of 484 CEO turnovers for 2000-2015, we establish that CEOs are red for poor performance. However, the likelihood of a poor-performing founder-CEO being fi red is lower than that of an outsider CEO. Moreover, having...

This paper provides new evidence that correlated abnormal compensation of CEOs and directors is symptomatic of agency problems associated with cronyism. We find that director abnormal compensation has a negative impact on the likelihood of CEO turnover and reduces the sensitivity of CEO turnover...

We identify the power of institutional blockholders to influence management using previous occurrences of forced CEO turnover at other firms in the blockholders' overall portfolio. We create a “powerful blockholder linkage” measure that strongly predicts future forced CEO turnover. These...

The determinants of firm level cash holdings are well documented, yet relatively less is known about the influence of CEO characteristics on corporate liquidity decisions. We examine changes in cash holdings around CEO turnover events, a period in which discrete changes in managerial preferences...

We model a corporate board evaluating a CEO of uncertain management ability. Each director receives a noisy private signal about CEO ability, after which directors discuss this ability and vote to retain or replace the CEO. Directors care about true CEO ability, since it affects their equity...

This paper examines the governance role of hedge fund activists by analyzing the impact of these activists on CEO turnover, CEO pay, and CEO pay-performance link in targeted companies. Using the difference-in-difference approach, we first find significantly higher CEO turnover following hedge...

We study changes in independent director behavior and labor market outcomes after experiencing a forced CEO turnover. We find they are more willing to fire CEOs of underperforming firms, hire outside CEOs after a firing and encourage better board meeting attendance by fellow directors. We also...

We examine the response of prosocial employees and boards of directors to corporate misconduct. We develop several proxies for the presence of prosocial employees and directors, based on the density of social networks and social capital in the county of the firms' headquarters and companies'...