Short Term Market Reactions to CEO Turnovers

Union Jack

Short Term Market Reactions to CEO Turnovers

Show simple item record Grøstad, Thomas Berg Johansen, Nicolai 2016-05-24T06:06:40Z 2016-05-24T06:06:40Z 2016-05-24
dc.description.abstract This thesis examines the short-term investor reactions to Chief Executive Officer (CEO) successions in the United States and Germany. The authors constructed a brand new data set, which contains 162 CEO successions of the largest companies listed on Frankfurt Stock Exchange (FWB) in Germany and New York Stock Exchange (NYSE) in the United States. The successions were gathered over a 15-year time period, between 2000 and 2015. The reactions in the financial markets where captured through the application of MacKinlay’s (1997) event study methodology, and statistically tested for any cumulative average abnormal return (CAAR) through 35 constructed hypotheses. In every CEO succession event, the authors collected a number of key independent variables, which in turn became the components of most of the created hypotheses. The independent variables comprised of gender, age, origin of the successor, tenure of the predecessor, company size and financial performance before the announcement. Furthermore, the most intriguing results were deeper analyzed in the reflection of the diverse corporate governance systems in the respective countries, as well as previous literature on CEO turnovers. The authors argued that substituting the CEO is the most influential mechanism the board of directors may apply in the pursuit of value creation. Thus, some kind of reaction in the financial market could be expected. The overall CAAR analysis indicated a positive market reaction to CEO turnovers, yet only statistically significant at a 90 % confidence level. The authors also argued that the differences between corporate governance systems in the United States and Germany, could affect the expectations to the newly appointed CEO. The aggregated CAAR analysis of each market suggested minimal differences in investor reactions to a CEO succession. Furthermore, the authors identified four other interesting findings. First, investors react very positively to externally hired CEOs in both US and Germany. Second, investors react positively to CEO turnovers amongst American and German firms that suffered from Poor financial performance. Third, investors have strong confidence in young CEOs in German companies. Last, there are indications of differences in the reception of male and female CEOs in the US. en_US
dc.format.extent 145 en_US
dc.language eng en_US
dc.subject.other Kandidatafhandlinger en_US
dc.title Short Term Market Reactions to CEO Turnovers en_US
dc.type mop en_US
dc.contributor.corporation Copenhagen Business School. CBS en_US
dc.contributor.department MSc in Economics & Business Administration en_US
dc.contributor.departmentshort 22 en_US
dc.description.notes Cand.merc.ibs. International Business Studies en_US
dc.publisher.year 2015 en_US Frederiksberg en_US
dc.title.subtitle An Event Study of American and German Corporations en_US

Files Size Format View
nicolai_berg_johansen_og_thomas_grøstad.pdf 7.478Mb PDF View/Open

The following license files are associated with this item:

This item appears in the following Collection(s)

Show simple item record