Voting with their feet: Institutional ownership changes around forced CEO turnover

Robert Parrino; Richard W. Sias; Laura T. Starks

doi:10.1016/S0304-405X(02)00247-7

Voting with their feet: Institutional ownership changes around forced CEO turnover

Robert Parrino, Richard W. Sias, Laura T. Starks

Research output: Contribution to journal › Article › peer-review

527 Scopus citations

Abstract

We investigate whether institutional investors "vote with their feet" when dissatisfied with a firm's management by examining changes in equity ownership around forced CEO turnover. We find that aggregate institutional ownership and the number of institutional investors decline in the year prior to forced CEO turnover. However, selling by institutions is far from universal. Overall, there is an increase in shareholdings of individual investors and a decrease in holdings of institutional investors who are more concerned with holding prudent securities, are better informed, or are engaged in momentum trading. Measures of institutional ownership changes are negatively related to the likelihoods of forced CEO turnover and that an executive from outside the firm is appointed CEO.

Original language	English (US)
Pages (from-to)	3-46
Number of pages	44
Journal	Journal of Financial Economics
Volume	68
Issue number	1
DOIs	https://doi.org/10.1016/S0304-405X(02)00247-7
State	Published - Apr 1 2003
Externally published	Yes

Keywords

CEO turnover
Corporate governance
Institutional investors

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

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10.1016/S0304-405X(02)00247-7

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Voting with their feet: Institutional ownership changes around forced CEO turnover

Abstract

Keywords

ASJC Scopus subject areas

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