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Do directors respond to stock mispricing? Evidence from CEO turnovers
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Goldman, Jim (2023) Do directors respond to stock mispricing? Evidence from CEO turnovers. Journal of Financial and Quantitative Analysis, 58 (6). pp. 2732-2751. doi:10.1017/S0022109022001193 ISSN 0022-1090.
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Official URL: http://doi.org/10.1017/S0022109022001193
Abstract
This article examines whether and how stock mispricing can affect the probability of CEO turnover. In a sample of 1,573 US public firms, I find that, after controlling for fundamental performance, a 1-standard-deviation negative uninformative stock price shock increases the likelihood of CEO turnover by 10%. The mispricing-turnover sensitivity is stronger at firms with an independent board, and a difference-in-difference analysis further supports that finding. Ancillary results suggest that independent directors’ career concerns may play a role in the response of independent boards to mispricing.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HF Commerce H Social Sciences > HG Finance |
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Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
Library of Congress Subject Headings (LCSH): | Chief executive officers, Chief executive officers -- Selection and appointment, Stocks -- Prices , Investment analysis, Investments -- Decision making | ||||||||
Journal or Publication Title: | Journal of Financial and Quantitative Analysis | ||||||||
Publisher: | Cambridge University Press | ||||||||
ISSN: | 0022-1090 | ||||||||
Official Date: | September 2023 | ||||||||
Dates: |
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Volume: | 58 | ||||||||
Number: | 6 | ||||||||
Page Range: | pp. 2732-2751 | ||||||||
DOI: | 10.1017/S0022109022001193 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Reuse Statement (publisher, data, author rights): | This article has been published in a revised form in Journal of Financial and Quantitative Analysis http://doi.org/10.1017/S0022109022001193. This version is published under a Creative Commons CC-BY-NC-ND. No commercial re-distribution or re-use allowed. Derivative works cannot be distributed. © The Author, 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Copyright Holders: | © The Author(s), 2022. Published by Cambridge University Press on behalf of the Michael G. Foster School of Business, University of Washington | ||||||||
Date of first compliant deposit: | 24 March 2023 | ||||||||
Date of first compliant Open Access: | 24 March 2023 | ||||||||
RIOXX Funder/Project Grant: |
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