Performance Changes Following Top Management Dismissals

JOURNAL OF FINANCE, Vol 50 No 4, September 1995

Posted: 4 Aug 1995

See all articles by Diane K. Denis

Diane K. Denis

University of Pittsburgh - Katz School of Business

David J. Denis

University of Pittsburgh

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Abstract

We document that forced resignations of top managers are preceded by large and significant declines in operating performance and followed by large improvements in performance. However, forced resignations are rare and are due more often to external factors (e.g. blockholder pressure, takeover attempts, etc.) than to normal board monitoring. Following the management change, these firms significantly downsize their operations and are subject to a high rate of corporate control activity. Normal retirements are followed by small increases in operating income and are also subject to a slightly higher incidence of post-turnover corporate control activity.

JEL Classification: D2

Suggested Citation

Denis, Diane K. and Denis, David J., Performance Changes Following Top Management Dismissals. JOURNAL OF FINANCE, Vol 50 No 4, September 1995, Available at SSRN: https://ssrn.com/abstract=6552

Diane K. Denis

University of Pittsburgh - Katz School of Business ( email )

368B Mervis Hall
Pittsburgh, PA 15260
United States
412-624-0296 (Phone)

David J. Denis (Contact Author)

University of Pittsburgh ( email )

Katz Graduate School of Business
Pittsburgh, PA 15260
United States
412-648-1708 (Phone)

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