Shareholder wealth effects of CEO departures: Evidence from the UK

Elisabeth Dedman; Stephen W J Lin

doi:10.1016/S0929-1199(01)00027-X

Shareholder wealth effects of CEO departures: Evidence from the UK

Elisabeth Dedman, Stephen W J Lin

Research output: Contribution to journal › Article › peer-review

Abstract

This paper examines share price behaviour surrounding announcements of CEO departures from UK firms listed on the All Share Index between 1990 and 1995. We find that many firms choose not to announce CEO departures, and that these firms have poorer performance records, and higher chances of future failure, than those firms who officially announce CEO turnover to the London Stock Exchange. The market reacts negatively to announcements of top executive departures, especially when the CEO is dismissed or leaves to take up another job. Share price reactions to the disclosure of top executive departure are significantly affected by the financial risk of the firm and whether the board announces a replacement CEO. © 2002 Elsevier Science B.V. All rights reserved.

Original language	English
Pages (from-to)	81-104
Number of pages	23
Journal	Journal of Corporate Finance
Volume	8
Issue number	1
DOIs	https://doi.org/10.1016/S0929-1199(01)00027-X
Publication status	Published - 2002

Keywords

Board structure
Corporate governance
Managerial departure

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10.1016/S0929-1199(01)00027-X

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abstract = "This paper examines share price behaviour surrounding announcements of CEO departures from UK firms listed on the All Share Index between 1990 and 1995. We find that many firms choose not to announce CEO departures, and that these firms have poorer performance records, and higher chances of future failure, than those firms who officially announce CEO turnover to the London Stock Exchange. The market reacts negatively to announcements of top executive departures, especially when the CEO is dismissed or leaves to take up another job. Share price reactions to the disclosure of top executive departure are significantly affected by the financial risk of the firm and whether the board announces a replacement CEO. {\textcopyright} 2002 Elsevier Science B.V. All rights reserved.",

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Shareholder wealth effects of CEO departures: Evidence from the UK

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Keywords

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