Sales maximization or profit maximization? How state shareholders discipline their CEOs in China
Document Type
Journal article
Source Publication
Asia-Pacific Journal of Financial Studies
Publication Date
6-1-2012
Volume
41
Issue
3
First Page
347
Last Page
375
Keywords
China's listed firms, Managerial monitoring, State ownership
Abstract
This study examines the determinants of Chief Executive Officer (CEO) turnover in Chinese state-owned firms. Based on a sample of 1 555 turnover cases among listed firms in China during the period 1999-2003, we obtain three main results. First, CEO turnover is negatively related to the sales performance but not the profitability of the core business. Second, the negative relationship between CEO turnover and sales is stronger for firms with excessive employment and higher organizational slack. Third, there is a significant post-turnover increase in sales but a decline in profitability of the core business. Overall, our evidence suggests that state shareholders put a greater emphasis on sales generation than on profitability when they monitor their CEOs.
DOI
10.1111/j.2041-6156.2012.01076.x
Print ISSN
20419945
E-ISSN
20416156
Publisher Statement
Copyright © 2012 Korean Securities Association
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Opper, S., Wong, S., & Yang, Y. (2012). Sales maximization or profit maximization? How state shareholders discipline their CEOs in China. Asia-Pacific Journal of Financial Studies, 41(3), 347-375. doi: 10.1111/j.2041-6156.2012.01076.x