Title

Governance with multiple objectives : evidence from top executive turnover in China

Document Type

Journal article

Source Publication

Journal of Corporate Finance

Publication Date

4-1-2009

Volume

15

Issue

2

First Page

230

Last Page

244

Keywords

Managerial turnovers, Multiple firm objectives, Firm performance, State ownership

Abstract

We examine the relationship between Chief Executive Officer (CEO) turnover and the performance of listed Chinese firms and obtain two results. First, we find a negative relationship between the level of pre-turnover profitability and CEO turnover when firms are incurring financial losses, but no such relationship when they are making profits. Second, there is an improvement in post-turnover profitability in loss-making firms, but no such improvement in profit-making firms. These results indicate the existence of a time-varying objective function, whereby shareholders have a greater incentive to discipline their CEOs on the basis of financial performance when their firms are incurring financial losses rather than profits.

DOI

10.1016/j.jcorpfin.2008.10.003

Print ISSN

09291199

E-ISSN

18726313

Publisher Statement

Copyright © 2008 Elsevier B.V.

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Chang, E. C., & Wong, S. M. L. (2009). Governance with multiple objectives: Evidence from top executive turnover in China. Journal of Corporate Finance, 15(2), 230-244. doi: 10.1016/j.jcorpfin.2008.10.003