Abstract
This paper examines the determinants of forced CEO turnover in a sample of UK firms during a period of substantial reforms in the board structure of domestic companies. Following the publication of the Cadbury Report (1992) UK listed companies increased their use of non-executive directors and were more willing to separate the functions of the CEO and the Chairman of the Board. We present strong evidence that greater outside director representation on company boards and separating the functions of the Chairman and the CEO lead to higher rates of forced CEO turnover, but this is not focused on the managers of poorly performing companies. The sensitivity of CEO turnover to company performance is greatest amongst companies that issue new equity. We also find that external CEO succession is more likely following forced turnover and is increasing in likelihood with the fraction of outside directors on company boards. Issues of new equity, and in particular placings, are correlated with internal CEO succession.
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