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We examine CEO turnover and firm financial performance. Accounting measures of performance relative to other firms deteriorate prior to turnover, and improve subsequently. Relative performance improvements are positively related to institutional shareholdings and are greater when successor CEOs are hired from outside the firm than when they are insiders. We(More)
We report evidence on chief executive officer ~CEO! turnover during the 1971 to 1994 period. We find that the nature of CEO turnover activity has changed over time. The frequencies of forced CEO turnover and outside succession both increased. However, the relation between the likelihood of forced CEO turnover and firm performance did not change(More)
We model CEO and director compensation using firm characteristics, CEO characteristics, and governance variables. After controlling for monitoring proxies, we find a significant positive relationship between CEO and director compensation. We hypothesize that this relationship could be due to unobserved firm complexity (omitted variables), and/or to excess(More)
In 1992, the Cadbury Committee issued the Code of Best Practice which recommends that boards of U.K. corporations include at least three outside directors and that the positions of chairman and CEO be held by different individuals. The underlying presumption was that these recommendations would lead to improved board oversight. We empirically analyze the(More)
The corporate finance literature has extensively modeled the distortions in investment decisions that result from conflicts of interest between claimholders. These models generally imply that firms make suboptimal project choices, either in terms of good projects that are rejected, or bad projects that are accepted. Since it is difficult to observe(More)
This paper develops a structural model that determines default spreads in a setting where the debt's collateral is endogenously determined by the borrower's investment choice, and a demand variable with permanent and temporary components. We also consider the possibility that the borrower cannot commit to taking the value-maximizing investment choice, and(More)
We investigate whether institutional investors ''vote with their feet'' when dissatisfied with a firm's management by examining changes in equity ownership around forced CEO turnover. We find that aggregate institutional ownership and the number of institutional investors decline in the year prior to forced CEO turnover. However, selling by institutions is(More)
(the editor), Cli! Smith (the referee), ReneH Stulz, and Luigi Zingales for helpful comments. Weisbach thanks the NSF (Grant SBR-9616675) for "nancial support. John Graham graciously provided tax-rate data used in the simulations. This paper was completed while Weisbach was on the faculty at University of Arizona. Abstract We examine the importance of(More)
anonymous referee, and seminar participants at the University of Texas at Austin for helpful comments. We are responsible for all remaining errors. ABSTRACT We compare CEOs of electric and gas utility firms to CEOs of unregulated firms. Utility CEOs tend to be older when appointed to office, have less prestigious educational backgrounds, and are more likely(More)