CEO tenure, the risk of termination and firm value

Jeff Brookman and Paul D. Thistle

Journal of Corporate Finance, 2009, vol. 15, issue 3, 331-344

Abstract: We examine CEOs' risk of termination, its determinants and its effect on firm value. Using survival analysis, we find that the risk of termination increases for about thirteen years before decreasing slightly with CEO tenure; 82% of CEOs have tenure of less than thirteen years. We also find that tenure increases with performance and compensation and decreases with monitoring by the board. Changes in the risk of termination do not have a significant effect on firm value. Taken as a whole, our results are consistent with the view that corporate governance functions reasonably well for the vast majority of firms.

Keywords: CEO; termination; Corporate; governance; CEO; tenure; CEO; turnover; Survival; analysis (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:15:y:2009:i:3:p:331-344

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