Ceo Turnover in Large Russian Firms

In: Business and Management

Submitted By qwerty8512
Words 5511
Pages 23
CEO Turnover in large Russian firms
Introduction
The main responsibility of Chief Executive Officer (CEO) is to form and implement strategic goals, policies and plans of the firms. The most studies show that Executive turnover has positive or negative impacts on firm performance. The decision of CEO’s change is an extremely important issue especially for the firms.
There are two ways for a firm to change CEO. First one consists of the obligatory change of CEO depending on external influences due to worsening of firm’s performance. Second one (internal) consists of the resignation of CEO due to better career opportunities, this is a voluntary change, and board initiated turnover. Majority of the studies found in literature review show that CEO decisions and the change of CEO are influential factors on firm’s financial performance and vice versa.
Studies such as Helmich (1974), Davidson et al. (1993) have approve that CEO turnover depends on firms' performance positively while Grusky (1964), Allen et al. (1979), Carroll (1984), Beatty and Zajac
(1987), Haveman (1993) have argued that CEO change is effecting firms’ performance in a negative way. On the other hand, Boeker (1992) have argued that CEO turnover is not effective at all on firm’s performance.
Other than these studies, Kesner and Sebora (1994) have used CEO turnover as a dependent variable.
The results of their study showed that the higher turnover CEO results in lower firm performance. Similarly
Virany et al. (1992), Shen (2000) have put forth a negative relation between ROA and CEO change rate.
Deond and Park (1999), Engel et al. (2003) and Defond and Hung (2004) have determined a negative relation between profits before interests and taxes and CEO turnover. In contrast, Cannella and Lubatkin
(1993), Zazac and Westphal (1996) have found weak relations between CEO turnover and firm…...

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