Research on CEO turnover

boss chair

Who leaves? Why? So what?

A September 2016 “Research Spotlight” by David F. Larcker and Brian Tayan from Stanford Graduate School of Business provides a summary of the academic literature on the relation between CEO performance and turnover.

Key findings of the publication with the title “CEO Turnover” are:

  • The relation between performance and forced termination is difficult to measure. It is not always clear whether a CEO resigned or was terminated.
  • In general, research suggests that companies are likely to terminate an underperforming CEO.

Larcker and Tayan base these results on the following research publications:

Brickley (2003)
Sample: ~10 studies, 1980s and 1990s
Conclusion: CEOs are not likely to be terminated for poor performance.

Huson, Parrino, and Starks (2001)
Sample: 1,802 CEOs, 1971-1994
Conclusion: CEOs are not likely to be terminated for poor performance.

Jenter and Lewellen (2014)
Sample: 5,356 CEOs, 1993-2011
Conclusion: CEOs are likely to be terminated for poor performance.

Fee, Hadlock, Huang, and Pierce (2015)
Sample: 6,787 turnover events, 1991-2007
Conclusion: CEOs are likely to be terminated for poor performance.

Jenter and Kanaan (2015)
Sample: 3,365 turnover events, 1993-2009
Conclusion: Boards consider industry performance in evaluating CEOs.

Mobbs (2013)
Sample: 2,231 companies, 1997-2006
Conclusion: Boards with viable alternatives provide stricter oversight of CEO performance.

Huson, Malatesta, and Parrino (2004)
Sample: 1,344 succession events, 1971-1994
Conclusion: Outside directors and institutional shareholders provide stricter oversight of CEO performance.

Guo and Masulis (2015)
Sample: 1,231 companies, 1996-2009
Conclusion: Independent directors provide stricter oversight of CEO performance.

Fich and Shivdasani (2006)
Sample: 508 companies, 1989-1995
Conclusion: Busy directors provide worse oversight of CEO performance.

Ellis, Guo, and Mobbs (2016)
Sample: S&P 1500 companies, 1997-2010
Conclusion: Directors become better monitors after experiencing a forced CEO termination and provide stricter monitoring.


Brickley, James A., 2003, Empirical research on CEO turnover and firm-performance: A discussion, Journal of Accounting and Economics 36, 227-233.

Ellis, Jesse, Lixiong Guo and Shawn Mobbs, 2016, Do directors learn from forced CEO turnover experience?, Social Science Research Network.

Fee, C. Edward, Charles J. Hadlock, Jing Huang and Joshua R. Pierce, 2015, Robust models of CEO turnover: New evidence on relative performance evaluation, Social Science Research Network.

Fich, Eliezer M. and Anil Shivdasani, 2006, Are busy boards effective monitors?, Journal of Finance 61, 689-724.

Guo, Lixiong and Ronald W. Masulis, 2015, Board structure and monitoring: New evidence from CEO turnovers, Review of Financial Studies 28, 2770-2811.

Huson, Mark R., Robert Parrino and Laura T. Starks, 2001, Internal monitoring mechanisms and CEO turnover: A long-term perspective, Journal of Finance 56, 2265-2297.

Huson, Mark R., Paul H. Malatesta and Robert Parrino, 2004, Managerial succession and firm performance, Journal of Financial Economics 74, 237-275.

Jenter, Dirk and Katharina Lewellen, 2014, Performance-induced CEO turnover, Social Science Research Network.

Jenter, Dirk and Fadi Kanaan, 2015, CEO turnover and relative performance evaluation, Journal of Finance 70, 2155–2184.

Mobbs, Shawn, 2013, CEOs under fire: The effects of competition from inside directors on forced CEO turnover and CEO compensation, Journal of Financial and Quantitative Analysis 48, 669-698.