Abstract
We use a large sample of U.S. firms to demonstrate that stock price crash (SPC) risk as a result of firms suddenly disclosing bad news is positively associated with CEO turnover in the subsequent year (t+1). Hand-collected data from industrial news and annual financial reports demonstrate that the majority of 393 CEO turnovers in our sample that occurred subsequent to SPC are forced in nature. We also find that firms with forced CEO turnovers are subsequently associated with lower discretionary accruals (lower opacity) and better firm performance than firms with other types of CEO turnovers. These results suggest that firms that take disciplinary actions against poor performing CEOs experience a reduction in opacity and an improvement in performance.
| Original language | English |
|---|---|
| Number of pages | 1 |
| Publication status | Published - 2017 |
| Event | Annual Congress of the European Accounting Association 2017 - Valencia, Spain Duration: 10 May 2017 → 12 May 2017 Conference number: 40th https://eaa-online.org/congress-2017/ |
Conference
| Conference | Annual Congress of the European Accounting Association 2017 |
|---|---|
| Abbreviated title | EAA 2017 |
| Country/Territory | Spain |
| City | Valencia |
| Period | 10/05/17 → 12/05/17 |
| Internet address |