Finance Seminar with Kai Li, University of British Columbia
The Department of Finance is proud to announce the upcoming seminar with Kai Li, Sauder School of Business, University of British Columbia.
Kai Li will present:
Investor Myopia and CEO Turnover:Evidence from Private Firms
Huasheng Gao, Nanyang Business School, Nanyang Technological University
Jarrad Harford, Foster School of Business, University of Washington
Kai Li, Sauder School of Business, University of British Columbia
We provide a large sample comparison of CEO turnover in public and private firms in order to gain insight into whether and how corporate governance environments influence CEO firing and hiring decisions. We how that public firms have higher CEO turnover rates and exhibit higher CEO turnoverperformance sensitivity than private firms. Public firms are less likely to hire external CEOs than private firms, especially less likely to hire external CEOs from private firms. Finally, we show that the performance improvement around CEO turnover is more evident for private firms than for public firms. We conclude that, contrary to some arguments, public firm CEOs are fired too frequently, possibly due to investor myopia creating pressure on public firm boards. The evidence of segmentation in the CEO labor market provides an explanation for how differing turnover risks can persist in public versus private firms.
See the full paper here