Axel Kind

Yves Schläpfer

English

Research Papers in Economics

Abstract 
 
Is a CEO Turnover Good or Bad News? 
 
 
 
 
Axel H. Kind , Assistant Professor, University of Basel 
Petersplatz 1, CH-4003 Basel 
hompage: http://www.wwz.unibas.ch/cofi/team/kind/ 
axel.kind@unibas.ch 
 
Yves Schläpfer, Assistant, University of Basel 
Department of Finance 
Peter Merian-Weg 6, CH-4002 Basel 
 
 
 
 
We investigate the information content of CEO turnovers by analyzing abnormal stock returns 
and the operating performance around the announcement date. The sample consists of 208 
CEO turnovers between January 1998 and June 2009 for companies belonging to the Swiss 
Performance Index. In line with previous studies, outside successions and forced turnovers 
yield positive and significant abnormal returns. However, a forced turnover does not per se 
represent a positive signal to shareholders. On the contrary, investors seem to critically assess 
the quality of the board’s firing decision by considering the quality of the departing manager. 
When an outperforming CEO is dismissed or forced to leave - an event that occurs in as many 
as 33% of all dismissals in our sample - shareholders appear to disesteem the board’s 
decision. This finding is confirmed in multivariate cross-sectional regressions and is robust to 
time subperiods and alternative test statistics. Finally, the operating performance significantly 
increases (decreases) in the years following (preceding) CEO turnovers and reflects on 
average the short-term stock-price reaction around the announcement date. 
 
 
 
 
 
Results of the Project Förderverein WWZ D-136 “Was ist der Aktienkursrelevante 
Informationsgehalt von CEO Wechsel bei Schweizer Unternehmen?“  
 

Is a CEO Turnover Good or Bad News?

http://wwz.unibas.ch/uploads/tx_x4epublication/Abstract_DP_D_136_Kind_Schlaepfer.pdf

Is a CEO Turnover Good or Bad News?

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Research Papers in Economics