Top Director Shake-Up: The Link between Chairman and CEO Dismissal

36 Pages Posted: 30 Jul 2002

Date Written: July 2002


Most UK companies separate the roles of CEO and Chairman. The former runs the company, the latter runs the board and the two directors interact to a great extent. Using turnover data on 2180 separate chairmanships of the top 460 UK companies over the 1990-1998 period, I find that the Chairman is six times more likely to be replaced when the CEO is dismissed. Moreover, the Chairman's previous position or the type of chairmanship does not affect the association between Chairman and CEO removal. But, the Chairman is four times more likely to be penalised when he is involved in the appointment of the departing CEO. Evidence on the dismissal events suggests that Chairman replacement enables the appointment of a new CEO and other directors with different human capital, which in turn facilitates changes in future corporate decisions.

Keywords: Director Turnover, Corporate Restructuring, Firm Performance

JEL Classification: G34, G39, M10, M40

Suggested Citation

Florou, Annita, Top Director Shake-Up: The Link between Chairman and CEO Dismissal (July 2002). Available at SSRN: or

Annita Florou (Contact Author)

Bocconi University ( email )

Via Roentgen 1
Milan, 20136


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