The effects of Top Management Turnover on Wealth of Stockholders and Corporate Performance

• Main Authors: Chien-Hung Chen, 陳建宏
• Other Authors: Hsu-Huei Huang
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/34734781764010273223

碩士 === 朝陽科技大學 === 財務金融系碩士班 === 89 === Abstract The top management plays an important role in the field of operation and management of the corporation. The policies he carries out will turn into corporate performance. Based on this viewpoint, he must be responsible for the corporate performance. The top management will be likely to change if the performance is poor. How the stock market reacts to the turnover? After the turnover, how the corporate performance goes on? Our research focuses on the top management turnover, and we want to understand the effects of top management turnover on the wealth of shareholders and corporate performance. In our research we divide our sample into ten groups, and also divide it into forced and voluntary groups. In the effects on the wealth of shareholders, we found that the reaction of the stock market is negative after voluntary turnover announcement. But it’s positive after forced turnover announcement. The results indicate that the reaction of stock market changes for the different turnover groups. In the research of corporate performance before and after top management turnover, we found that the relative performance of forced turnover group is more negative than voluntary group before top management turnover. It means that the top managements of forced turnover group are more likely to be forced departure because of their poor performance. And in the research of corporate performance after turnover, we found that the relative performance after turnover is negative in both forced departure group and voluntary group. It means that corporate performance doesn’t be improved when the top management changed and falls behind the industrial average performance. In the three theories of corporate performance after turnover, our result supports vicious-circle theory. Keywords: top management turnover, agency problems, voluntary turnover, forced turnover