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Table 11 Operational performance (change in ROA) and interim CEO successions

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

  Quarter 1 change in ROA Quarter 2 change in ROA
Entire sample Voluntary turnovers Forced turnovers Entire sample Voluntary turnovers Forced turnovers
Interim CEO succession −2.489** −1.925 −2.943 −2.217*** −2.577** −2.464
(1.097) (1.206) (2.753) (0.830) (1.156) (1.741)
Quarterly industry change in ROA −1.177** −1.146*** −1.253 −0.465 −0.807*** 1.185
(0.498) (0.373) (1.863) (0.300) (0.278) (1.006)
Firm size −0.217 −0.463*** 0.837 −0.372** −0.563*** 0.320
(0.225) (0.166) (0.926) (0.170) (0.159) (0.582)
CEO’s age 2.869 −0.739 13.941 −0.825 −3.757* 6.556
(2.697) (2.161) (10.92) (2.044) (2.073) (6.908)
CEO’s tenure −0.780* −0.977*** −0.558 −0.480 −0.602* −0.311
(0.425) (0.326) (1.663) (0.322) (0.312) (1.057)
CEO ownership −0.009 0.072 −0.671 0.002 0.048 −0.375
(0.096) (0.067) (0.623) (0.072) (0.064) (0.393)
Inside CEO succession −0.264 0.515 −1.526 −0.440 0.288 −1.506
(0.716) (0.584) (2.334) (0.542) (0.559) (1.474)
Diversification 0.092 0.124 1.670 −0.110 −0.101 1.245
(0.780) (0.560) (3.487) (0.592) (0.539) (2.206)
Leverage 0.164 1.058 −2.422 0.954 1.250 1.130
(1.658) (1.239) (6.498) (1.258) (1.190) (4.136)
Industry instability 0.415 0.555* 0.055 0.328 0.398 −0.118
(0.455) (0.333) (1.937) (0.345) (0.320) (1.226)
CEO duality −1.163** −0.533 −3.496 −0.694 −0.149 −2.363
(0.580) (0.429) (2.315) (0.439) (0.412) (1.466)
Board ownership −0.012 −0.031 0.081 −0.010 −0.022 0.038
(0.037) (0.028) (0.132) (0.028) (0.027) (0.084)
Percentage of outside directors 2.894 2.262* 2.125 2.186 1.278 3.519
(1.841) (1.374) (7.172) (1.400) (1.322) (4.572)
Board size −0.078 0.026 −0.399 −0.052 0.025 −0.288
(0.096) (0.070) (0.400) (0.072) (0.067) (0.251)
Died −1.828 −1.576   0.080 0.150  
(3.393) (2.211)   (2.565) (2.117)  
Illegal 2.209   0.495 1.273   −0.316
(2.343)   (4.790) (1.772)   (3.019)
Number of observations 1,621 1,275 346 1,612 1,270 342
Year dummies Yes Yes Yes Yes Yes Yes
Adjusted R2 0.002 0.014 0.037 0.001 0.018 0.038
  Quarter 3 change in ROA Quarter 4 change in ROA
Interim CEO succession −1.492** −2.429** −1.406 −1.255* −2.083* −0.565
(0.757) (1.134) (1.403) (0.671) (1.184) (0.765)
Quarterly industry change in ROA −0.544** −1.05*** 2.121*** −0.365 −0.304 −0.635
(0.262) (0.258) (0.814) (0.227) (0.263) (0.443)
Firm size −0.420*** −0.571*** 0.078 −0.554*** −0.586*** −0.529**
(0.156) (0.157) (0.472) (0.138) (0.164) (0.259)
CEO’s age −1.263 −3.921* 4.967 −2.939* −2.805 −1.268
(1.865) (2.039) (5.591) (1.656) (2.135) (3.061)
CEO’s tenure −0.742** −0.844*** −0.434 −0.795*** −1.000*** −0.028
(0.295) (0.308) (0.856) (0.261) (0.323) (0.465)
CEO ownership 0.023 0.075 −0.307 0.014 0.051 −0.141
(0.066) (0.063) (0.317) (0.058) (0.066) (0.174)
Inside CEO succession −0.734 −0.173 −1.623 −0.846* −0.463 −1.523**
(0.496) (0.550) (1.192) (0.442) (0.58) (0.656)
Diversification 0.078 0.288 0.372 −0.002 0.006 1.108
(0.542) (0.529) (1.819) (0.485) (0.559) (0.999)
Leverage −0.433 0.426 −1.325 0.344 1.346 −2.124
(1.157) (1.170) (3.411) (1.028) (1.229) (1.858)
Industry instability 0.161 0.241 −0.256 0.163 0.456 −0.905
(0.316) (0.316) (0.988) (0.280) (0.331) (0.556)
CEO duality −0.496 0.059 −2.331** −0.130 −0.192 −0.012
(0.401) (0.404) (1.181) (0.357) (0.425) (0.647)
Board ownership −0.012 −0.029 0.050 −0.004 −0.016 0.034
(0.025) (0.026) (0.068) (0.022) (0.028) (0.037)
Percentage of outside directors 1.286 0.166 3.817 0.128 0.304 −1.107
(1.278) (1.298) (3.696) (1.133) (1.361) (2.008)
Board size −0.028 0.036 −0.211 −0.002 0.040 −0.114
(0.066) (0.066) (0.202) (0.059) (0.069) (0.111)
Died 0.756 0.851   0.489 0.665  
(2.337) (2.076)   (2.065) (2.168)  
Illegal 1.928   0.479 0.443   −0.117
(1.614)   (2.429) (1.428)   (1.322)
Number of observations 1,603 1,264 339 1,585 1,250 335
Year dummies Yes Yes Yes Yes Yes Yes
Adjusted R2 0.006 0.030 0.001 0.027 0.019 0.043
  1. This table reports results for OLS regressions where the dependent variable is the change in ROA from the pre-succession quarter 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