Executive Turnover in UK Firms: the impact of Cadbury
نویسندگان
چکیده
This study examines the determinants of non-routine CEO departure in a comprehensive sample of UK listed firms between 1990 and 1995. It looks at whether the Cadbury Report, published in December 1992 has had an impact on the agency problem of managerial entrenchment. I find a strong negative relationship between firm performance and the probability of non-routine CEO departure, with evidence that the disciplinary process has become more efficient in the post-Cadbury regime. In addition, I find weak evidence that the insulatory effect of CEO stock ownership diminishes in power in the later regime. Whilst dividing the roles of CEO and chairman reduces the entrenchment of the CEO, the number of non-executive directors has no impact on the probability of his dismissal following poor firm performance. JEL Classification: G3
منابع مشابه
Corporate Governance Reforms and Executive Compensation Determination: Evidence from the UK
This paper examines the effect that the ‘Cadbury reforms’ have had on the pay determination process of executives in the UK Our results suggest that, on average, the impact has been disappointing. The relationship between pay and performance remains weak and the link to firm size has, if anything, been strengthened. However, our results suggest considerable heterogeneity in the impact of the re...
متن کاملBoard Structure and Executive Pay: Evidence from the UK
We examine the impact of board structure on executive pay for 1,880 UK public firms over 1983-2002, using panel data analysis. Firstly, the proportion of non-executive directors tends to decrease the rate of increase in executive pay whilst board size tends to increase it. Secondly, the proportion of non-executives strengthens the relation between the rate of increase in executive pay and chang...
متن کاملManagerial remuneration and disciplining in the UK: A tale of two governance regimes
We simultaneously analyze two mechanisms of the managerial labor market (CEO turnover and remuneration schemes) in two different regulatory regimes, namely before and after the sweeping governance reforms adopted in the UK in the 1990s. We employ sample selection models to examine firms in a pre-Cadbury Code period (1988-1993) and a post-Combined Code period (1998-2004). CEOs’ compensation and ...
متن کاملThe Impact of the Cadbury Committee Recommendations on Analysts’ Earnings Forecasts: UK Evidence
This paper examines the relationship between the board structure of UK firms and the accuracy of individual analysts’ earnings forecasts with respect to information asymmetry and agency theory. We hypothesize that managers of firms complying with the recommendations of The Code of Best Practice may have “less to hide” and, subsequently, provide more information to outsiders (including analysts)...
متن کاملThe Impact of Investment Inefficiency and Cash Holding on CEO Turnover
The purpose of this study is to investigate the effective of investment inefficiency and cash holding on CEO turnover. This study applies logistic regression method estimator to investigate the relationship between examine the effective of investment inefficiency and cash holding on CEO turnover of 1,309 firm-year observations in Iran for the period of 2009-2019. According to positive relati...
متن کامل