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Top Executive Dismissal, Ownership and Corporate Performance

Conyon, Martin and Florou, Annita (2002) Top Executive Dismissal, Ownership and Corporate Performance. Accounting and Business Research, 32 (4). pp. 209-225. ISSN 0001-4788

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Abstract

This paper evaluates the empirical relationship between top executive turnover and firm performance. Based on a sample of the 460 largest UK listed companies during the period 1990-1998 we establish an inverse and robust statistical relation between the probability of a management change and a firm's performance: top executives are fired for poor performance. This can result from internal monitoring of management by the board or block share holders. Second, the data indicate that only very poor levels of performance affect significantly the turnover likelihood: corporate performance must fall dramatically to force a senior executive job separation. Third, the likelihood of managerial turnover for poor performance has not changed over time: today's senior managers face the same disciplining effects as those senior managers in earlier years. Finally, there seems to be no evidence that managerial stock ownership, measured as the proportion of ordinary shares owned by top managers, enables them to become entrenched.

Item Type: Article
Journal or Publication Title: Accounting and Business Research
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Departments: Lancaster University Management School > Accounting & Finance
ID Code: 53985
Deposited By: ep_importer_pure
Deposited On: 26 Jun 2012 10:16
Refereed?: Yes
Published?: Published
Last Modified: 09 Apr 2014 23:24
Identification Number:
URI: http://eprints.lancs.ac.uk/id/eprint/53985

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