TITLE

Management Forecast Accuracy and CEO Turnover

AUTHOR(S)
Lee, Sam Sunghan; Matsunaga, Steven R.; Park, Chul W.
PUB. DATE
November 2012
SOURCE
Accounting Review;Nov2012, Vol. 87 Issue 6, p2095
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
We investigate whether management forecast accuracy provides a signal regarding CEOs' ability to anticipate and respond to future events by examining the relation between management forecast errors and CEO turnover. We find that the probability of CEO turnover is positively related to the magnitude of absolute forecast errors when firm performance is poor and that this positive relation holds for both positive and negative forecast errors. In addition, we find that the positive relation between CEO turnover and the absolute forecast errors is concentrated in the sample of less entrenched CEOs. Our findings indicate that boards of directors use management forecast accuracy as a signal of CEOs' managerial ability and that managers bear a cost for issuing inaccurate forecasts.
ACCESSION #
83392148

 

Related Articles

  • The Supply of Corporate Directors and Board Independence. Knyazeva, Anzhela; Knyazeva, Diana; Masulis, Ronald W. // Review of Financial Studies;Jun2013, Vol. 26 Issue 6, p1561 

    Empirical evidence on the relations between board independence and board decisions and firm performance is generally confounded by serious endogeneity issues. We circumvent these endogeneity problems by demonstrating the strong impact of the local director labor market on board composition....

  • TRUTH IS LOST AMIDST CHAOS, CORPORATE CONFESSIONALS. Sraeel, Hooly // U.S. Banker;Aug2002, Vol. 112 Issue 8, p8 

    Comments on the need for board members independence from chief executive officers. Compliance of corporations with the law; Accountability of executive teams on corporate operations; Assurance of customer satisfaction by the companies.

  • ADVICE VS. OVERSIGHT. Elson, Charles M. // Conference Board Review;Summer2010, Vol. 47 Issue 4, p49 

    The author emphasizes that the role of a company's board of directors is to monitor the chief executive officer's (CEO) performance, and questions the idea that CEOs should require a board member to perform according to his or her expectations.

  • Trading Volumes and Managerial Succession in Electronic Service Industries: Hybrid Grey-Market Model. Hsin-Fu Tsai; Wei-Chuan Wang // Journal of Grey System;2008, Vol. 20 Issue 2, p171 

    This paper utilizes hybrid Grey-Market Model (Lin, Wang and Lin. 2008) to analyze the impacts of trading volumes on underlying stock of CEO Succession in Taiwanese electronic industries. These results provide evidences that chairman succession suggests that the corporate power structure of Board...

  • Worldwide optimism for 2011. Woods, David; Wicks, Nikki // PRWeek (London);2/18/2011, p2 

    The article reports on how public relations (PR) heads view the state of the consultancy market for 2011 according to a survey conducted by the International Communications Consultancy Organization. The chief executive officers and board of directors express positive attitude by predicting...

  • Trouble@Twitter. Hempel, Jessi // Fortune;5/2/2011, Vol. 163 Issue 6, p66 

    The article focuses on corporate politics at the microblogging service company Twitter Inc. It states that in March 2011 Twitter co-founder Jack Dorsey was rehired as chief executive officer of Twitter after being demoted by Twitter's board of directors in 2008. It compares Twitter to social...

  • Trouble@Twitter. Hempel, Jessi // Fortune International (Asia);5/2/2011, Vol. 163 Issue 6, p40 

    The article focuses on corporate politics at the microblogging service company Twitter Inc. It states that in March 2011 Twitter co-founder Jack Dorsey was rehired as chief executive officer of Twitter after being demoted by Twitter's board of directors in 2008. It compares Twitter to social...

  • A CHANGING OF THE GUARD: EXECUTIVE AND DIRECTOR TURNOVER FOLLOWING CORPORATE FINANCIAL RESTATEMENTS. Arthaud-Day, Marne L.; Dalton, Catherine M.; Certo, S. Trevis; Dalton, Dan R. // Academy of Management Annual Meeting Proceedings;2005, pA1 

    This study examines the impact of corporate earnings restatements on strategic leaders. We hypothesize that restatement firms will attempt to reestablish organizational legitimacy by removing the leadership associated with the restatement event. As predicted, restatement firms are nearly twice...

  • A Model of CEO Dismissal. Fredrickson, James W.; Hambrick, Donald C.; Baumrin, Sara // Academy of Management Review;Apr88, Vol. 13 Issue 2, p255 

    A model is presented in which social and political factors are used to predict the likelihood of a CEO's dismissal. Although an organization's performance affects dismissal of a CEO, it is argued that the link is not direct. It is mediated by four constructs: (a) the board of directors'...

Share

Read the Article

Courtesy of THE LIBRARY OF VIRGINIA

Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics