Bernadette A. Minton provided able research assistance. Theodor Baums, Michael Burda, Mitch Petersen, Alan Schwartz, Ernst-Ludwig Von Thadden and Luigi Zingales. the author acknowledges research support from the William Ladany Faculty Research Fund, the Olin Foundation and the Center for Research in Security Prices. This paper is a less technical version of ‘Top Executives, Turnover, and Firm Performance in Germany’, originally published in the April 1994 issue of the Journal of Law, Economics and Organization.
Corporate governance and incentives in German companies: Evidence from top executive turnover and firm performance
Article first published online: 27 OCT 2006
European Financial Management
Volume 1, Issue 1, pages 23–36, March 1995
How to Cite
Kaplan, S. N. (1995), Corporate governance and incentives in German companies: Evidence from top executive turnover and firm performance. European Financial Management, 1: 23–36. doi: 10.1111/j.1468-036X.1995.tb00004.x
- Issue published online: 27 OCT 2006
- Article first published online: 27 OCT 2006
- Corporate governance;
- incentives in German companies;
- top executive turnover;
- firm performance
This paper examines executive turnover—both for management and supervisory boards—and its relation to firm performance in the largest companies in Germany in the 1980s. Turnover of the management board increases significantly with poor stock performance and particularly poor (i.e. negative) earnings, but is unrelated to sales growth and earnings growth. These turnover-performance relations do not vary with measures of stock ownership and bank voting power. Supervisory board appointments and turnover also increase with poor stock performance, but are unrelated to other measures of performance.