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

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

Research output: Contribution to journalArticlepeer-review

435 Scopus citations


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 languageEnglish (US)
Pages (from-to)3-46
Number of pages44
JournalJournal of Financial Economics
Issue number1
StatePublished - Apr 1 2003


  • CEO turnover
  • Corporate governance
  • Institutional investors

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Strategy and Management


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