CEO Turnover Case Study

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Throughout the last years there has been an increase in the CEO turnover rate (see Kaplan/Minton 2006: 2). The board, the committee which oversees appointing and dismissing the chief executive officer of the firm, gets confronted with a difficult decision if the firm performance decreases. It has to evaluate whether or not the CEO is at fault for the bad performance and if a CEO turnover is going to yield an improvement of performance. Typically, the firm performance is considered to be the most significant measure for evaluating a CEO. The ambiguous part of evaluating performance is assessing in what ways the CEO is responsible for it and how a CEO turnover is going to improve firm performance. Therefore, board members must be careful not to rely on firm performance only because the CEO cannot influence some of the factors affecting it. While most researchers look deeper into the performance-turnover relationship, others have mentioned that there are more factors that affect the board decision on CEO turnover. One of these factors is the tenure of a CEO. The tenure, which is how long the CEO has been holding office for, seems to have a direct impact on the board’s decision of dismissing a …show more content…

After the theoretical aspects of this relationship are clear I want to outline the influencing variables (Chapter 2.3), hence sorting out the relevant ones to then deduce the hypothesis (Chapter 2.4) of this thesis. Following is the evaluation of the relevant data in the empirical analysis (Chapter 3) which is concluded by putting the hypothesis to a test (Chapter 3.4). Finally, I am going to complete the thesis by highlighting the acquired information one more time and, in the end of the conclusion, answering the research question (Chapter

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