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Table 10 Operational performance (ROE) and interim CEO successions

From: The impact of CEO turnover on firm performance around interim successions

  ROA quarter 1 ROA quarter 2
Entire sample Voluntary turnovers Forced turnovers Entire sample Voluntary turnovers Forced turnovers
Interim CEO succession −17.632*** −3.074 −31.77** −6.755** −8.200*** −6.957
(5.293) (2.947) (15.866) (3.069) (2.634) (9.003)
Pre-succession ROA 0.030** 0.028*** 1.001* 0.328*** 0.292*** 0.493
(0.014) (0.005) (0.594) (0.042) (0.024) (0.339)
Pre-succession ROA change −0.009 −0.008* −0.655 0.001 0.001 −0.093
(0.013) (0.004) (0.562) (0.008) (0.004) (0.321)
Industry pre-succession ROA 2.046* −1.404*** 20.419*** −0.124 −0.618* 3.953
(1.210) (0.431) (6.046) (0.604) (0.330) (3.092)
Industry post-succession ROA 0.856 2.01*** −7.796 0.941 1.21*** −1.384
(1.205) (0.436) (5.673) (0.592) (0.336) (2.632)
Firm size −1.543 0.007 −5.752 0.114 −0.403 2.121
(1.081) (0.389) (5.422) (0.626) (0.349) (3.074)
CEO’s age 31.754** −2.802 82.148 14.198* −5.098 29.670
(12.858) (5.059) (63.816) (7.47) (4.527) (36.614)
CEO’s tenure 1.288 0.742 1.795 −0.201 0.041 0.058
(2.041) (0.764) (9.57) (1.184) (0.687) (5.427)
CEO ownership −0.008 0.037 −1.420 −0.014 0.095 −1.751
(0.459) (0.157) (3.516) (0.265) (0.140) (2.006)
Inside CEO succession 5.527 2.526* 7.983 4.400** 2.877** 5.230
(3.432) (1.348) (13.678) (1.997) (1.206) (7.816)
Diversification 5.439 −0.249 24.654 0.181 −1.139 8.097
(3.750) (1.318) (19.985) (2.178) (1.185) (11.362)
Leverage 6.374 4.371 46.220 3.118 4.194 2.910
(9.100) (3.295) (43.589) (5.290) (2.956) (25.242)
Industry instability −0.520 0.997 −5.528 −0.075 0.525 −3.680
(2.177) (0.772) (11.077) (1.259) (0.691) (6.27)
CEO duality −3.811 −1.573 −10.691 −3.896** −1.000 −12.597
(2.756) (0.992) (13.581) (1.598) (0.888) (7.752)
Board ownership −0.006 −0.004 −0.131 0.029 −0.015 0.308
(0.177) (0.065) (0.786) (0.102) (0.058) (0.448)
Percentage of outside directors −0.357 −0.987 −2.302 8.128 4.026 18.397
(8.826) (3.209) (41.637) (5.12) (2.872) (24.074)
Board size 0.114 0.075 −0.137 −0.064 0.068 −0.845
(0.452) (0.161) (2.275) (0.261) (0.145) (1.287)
Died −9.285 −10.509**   −1.434 −1.756  
(15.581) (4.979)   (8.998) (4.452)  
Illegal −4.868   −8.596 1.217   −0.19
(10.963)   (26.411) (6.335)   (14.953)
Number of observations 1,518 1,211 307 1,504 1,204 299
Year dummies Yes Yes Yes Yes Yes Yes
Adjusted R2 0.0302 0.118 0.022 0.058 0.138 0.038
  ROA quarter 3 ROA quarter 4
Interim CEO succession −5.492** −6.636*** −5.612 −5.535** −8.101*** −1.749
(2.486) (1.730) (7.492) (2.440) (1.510) (7.415)
Pre-succession ROA 0.492*** 0.451*** 0.622** 0.287*** 0.284*** 0.302
(0.072) (0.035) (0.283) (0.075) (0.033) (0.311)
Pre-succession ROA change −0.300*** −0.359*** −0.204 −0.178** −0.240*** −0.010
(0.069) (0.034) (0.268) (0.072) (0.032) (0.269)
Industry pre-succession ROA 0.835 −0.278 5.782** 0.340 0.117 2.684
(0.552) (0.252) (2.598) (0.517) (0.217) (2.373)
Industry post-succession ROA −0.398 0.241 −2.795 −0.152 −0.232 −0.836
(0.494) (0.225) (2.378) (0.480) (0.211) (1.907)
Firm size −0.119 −0.114 0.955 0.150 −0.073 1.736
(0.511) (0.231) (2.563) (0.500) (0.203) (2.528)
CEO’s age 9.053 −6.090** 15.578 19.663*** 0.242 22.088
(6.136) (3.005) (31.147) (6.061) (2.638) (31.424)
CEO’s tenure 0.059 −0.272 0.209 0.137 −0.043 1.074
(0.964) (0.452) (4.569) (0.944) (0.396) (4.576)
CEO ownership −0.018 0.051 −1.290 −0.086 0.032 −1.680
(0.215) (0.092) (1.678) (0.212) (0.082) (1.662)
Inside CEO succession 2.094 0.575 3.058 2.294 −0.976 5.710
(1.625) (0.796) (6.574) (1.605) (0.706) (6.628)
Diversification 1.070 0.596 2.117 1.198 0.057 6.814
(1.768) (0.782) (9.460) (1.741) (0.690) (9.398)
Leverage 4.237 3.382* 12.178 2.429 4.616*** −5.038
(4.327) (1.963) (21.204) (4.233) (1.733) (20.334)
Industry instability −0.662 0.066 −3.271 −0.903 −0.041 −4.704
(1.026) (0.457) (5.240) (1.001) (0.400) (5.296)
CEO duality −2.348* −0.356 −10.173 −1.983 −0.173 −8.253
(1.300) (0.586) (6.471) (1.276) (0.515) (6.500)
Board ownership 0.010 −0.012 0.101 0.032 −0.026 0.287
(0.083) (0.039) (0.374) (0.081) (0.034) (0.369)
Percentage of outside directors 2.770 −0.279 12.084 1.325 −0.770 2.143
(4.175) (1.897) (20.18) (4.098) (1.666) (20.286)
Board size 0.091 0.126 −0.335 0.134 0.171** −0.250
(0.212) (0.095) (1.073) (0.209) (0.084) (1.079)
Died −4.021 −4.434   −3.267 −2.888  
(7.279) (2.920)   (7.101) (2.551)  
Illegal 3.393   3.373 0.101   0.553
(5.128)   (12.483) (4.934)   (12.241)
Number of observations 1,489 1,194 295 1,467 1,178 289
Year dummies Yes Yes Yes Yes Yes Yes
Adjusted R2 0.049 0.142 0.021 0.040 0.099 0.027
  1. This table reports results for OLS regressions where the dependent variable is the quarterly ROE over the period one, two, three, and four quarters following the CEO turnover. Definitions for forced and voluntary turnover are provided in Table 1. Definitions for all other variables are provided in Appendix 1. Coefficient estimates are provided with robust standard errors shown in parentheses. Intercepts are not reported for brevity
  2. p < 0.10, ** p < 0.05, *** p < 0.01