Earnings performance measures and CEO turnover

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Journal Title
Journal ISSN
Volume Title
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
Date
2019-06-01
Major/Subject
Mcode
Degree programme
Language
en
Pages
18
249-266
Series
JOURNAL OF CORPORATE FINANCE, Volume 56
Abstract
Prior research reports that analysts focus on street earnings, which are measures that typically exceed GAAP earnings. Using a sample of CEO turnovers from 1993 to 2016 we show that the likelihood and speed of forced CEO turnover - but not voluntary turnover - are higher when analysts exclude income-decreasing items. The association between exclusions and forced turnovers is particularly pronounced for high magnitude exclusions. We also show that greater street exclusion of income-decreasing items, the lower CEO bonus payouts. We find that boards use audited and more conservative GAAP earnings in evaluating and dismissing CEOs, except in the recent period of 2010–2016.
Description
Keywords
CEO turnover, GAAP earnings, Street earnings, Street exclusions
Other note
Citation
Jarva , H , Kallunki , J P & Livne , G 2019 , ' Earnings performance measures and CEO turnover : Street versus GAAP earnings ' , JOURNAL OF CORPORATE FINANCE , vol. 56 , pp. 249-266 . https://doi.org/10.1016/j.jcorpfin.2019.02.005