CEO turnover in China:the role of market-based and accounting performance measures

Conyon, Martin and He, Lerong (2014) CEO turnover in China:the role of market-based and accounting performance measures. European Journal of Finance, 20 (7-9). pp. 657-680. ISSN 1351-847X

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We investigate the relationship between chief executive officer (CEO) turnover and firm performance in China's publicly traded firms. We provide evidence on the use of accounting and market-based performance measures in CEO turnover decision. We also investigate the moderating roles of noise in performance measures, firm growth opportunities, state-owned enterprises, and corporate governance reform on the weights attached to these performance measures. We observe that Chinese listed firms rely more on accounting performance than on stock market performance when determining CEO turnover. Firms with noisier performance measures and larger growth opportunities rely less on both accounting performance and stock market performance in CEO replacement decision. State-controlled firms are more likely to use accounting performance to determine CEO turnover. Finally, we observe that the weight attached to the accounting performance measure is significantly reduced and the weight attached to the stock market performance measure is significantly increased after the governance reform. We also observe that the reform has different impact on state-owned firms and private firms in terms of the sensitivity of CEO turnover to firm performance.

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Journal Article
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European Journal of Finance
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11 Mar 2014 16:41
Last Modified:
21 Nov 2022 22:15