CEO Turnover and Accounting Earnings: The Role of Earnings Persistence

Although earnings persistence should have a nontrivial impact on chief executive officer (CEO) turnover decisions, prior studies paid little attention to the role of in CEO decisions. This study examines effect sensitivity (i.e., negative relation) performance. First, we find that forced turnovers performance is greater when are more persistent. We also show among numerous attributes, most direct and dominant attribute explaining turnover-earnings sensitivity. Further, compensation-earnings weak, stronger, suggesting discipline system substitutes for compensation neglected by policies. Overall, our findings suggest plays crucial decisions elevating board’s knowledge future implications current earnings. Finally, even it paper was accepted Shiva Rajgopal, accounting.