Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Finance

No 1999-10: CEO Turnovers and Corporate Governance: Evidence from the Copenhagen Stock Exchange

Robert Neumann and Torben Voetmann
Additional contact information
Robert Neumann: Department of Finance, Copenhagen Business School, Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark
Torben Voetmann: Department of Finance, Copenhagen Business School, Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark

Abstract: This paper examines the relationship between performance and CEO turnovers using a sample of 81 turnovers and 81 matching companies listed on the Copenhagen Stock Exchange. We find that poor performance increases the probability of management replacements and that forced layoffs are value-increasing events while voluntary resignations are value-decreasing events. Institutional investors as active monitors, or part of corporate control, are not exhibited in the analysis of CEO turnovers. If institutional investors have any influence on CEO turnovers, then it is not revealed in our data. But, the results suggest that institutional investors' equity holdings tend to protect managers from replacement.

Keywords: CEO Turnovers; Corporate Governance; Ownership Structure

JEL-codes: G14; G23; G32

34 pages, May 17, 2001

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