CEO tenure,the risk of termination and firm value |
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| Authors: | Jeff Brookman Paul D Thistle |
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| Institution: | 1. University of Missouri, Trulaske College of Business, Columbia, MO 65201, United States;2. Florida Atlantic University, College of Business, Boca Raton, FL 33431, United States;3. San Jose State University, Lucas College of Business, San Jose, CA 95192, United States;1. The Business School, Bangor University, College Road, Bangor, Gwynedd LL57 2DG, UK;2. Office of Technical Assistance, United States Department of the Treasury, 1750 Pennsylvania Ave NW, Washington DC 20006, USA;3. Norwich Business School, University of East Anglia, Earlham Road, Norwich NR4 7TJ, UK;1. Cardiff Business School, Cardiff University, United Kingdom;2. European Corporate Governance Institute (ECGI), Belgium;3. Karlsruhe Institute of Technology, Germany;1. Leeds University Business School, Maurice Keyworth Building, University of Leeds, Leeds, UK;2. Bangor Business School, Hen Goleg, Bangor University, College Road, Bangor LL57 2DG, UK |
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| Abstract: | We examine CEOs' risk of termination, its determinants and its effect on firm value. Using survival analysis, we find that the risk of termination increases for about thirteen years before decreasing slightly with CEO tenure; 82% of CEOs have tenure of less than thirteen years. We also find that tenure increases with performance and compensation and decreases with monitoring by the board. Changes in the risk of termination do not have a significant effect on firm value. Taken as a whole, our results are consistent with the view that corporate governance functions reasonably well for the vast majority of firms. |
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