Top executive turnovers: Separating decision and control rights

Authors

  • Robert Neumann,

    1. Danske Markets, Danske Bank, Holmens Kanal 2-12, 1092 Copenhagen K, Denmark
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  • Torben Voetmann

    Corresponding author
    1. Cornerstone Research and Finance Department, The Wharton School, 3620 Locust Walk, Steinberg Hall–Dietrich Hall, Suite 2344, Philadelphia, PA 19104-6367, USA
    • Cornerstone Research, Finance Department, The Wharton School, 3620 Locust Walk, Steinberg Hall–Dietrich Hall, Suite 2344, Philadelphia, PA 19104-6367, USA
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Abstract

This paper examines the relationship between performance and top executive turnovers using a sample of 81 turnovers and matching companies listed on the Copenhagen Stock Exchange. We find that poor market performance increases the probability of management replacements and that forced layoffs are value-increasing events while voluntary resignations are value-decreasing events. Large shareholders as active monitors, or part of corporate control, are not exhibited in the results. If large shareholders have any influence on CEO turnovers it is not revealed in our data. Indeed, separating control rights from decision rights does not appear to affect managerial turnovers. Copyright © 2004 John Wiley & Sons, Ltd.

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