Accounting information and internal performance evaluation

Blackwell, David W.; Brickley, James A.; Weisback, Michael S.

doi:10.1016/0165-4101(94)90032-9

Cited by 162 publications

(68 citation statements)

References 39 publications

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“…Most 'baths' involve write offs that impact net income but not operating income. As a robustness check, we also measure accounting performance using return on assets (ROA) measured as net income divided by total assets (e.g., Blackwell et al 1994;Mehran 1995). The ROA results are qualitatively the same as the operating income results unless otherwise noted.…”

Section: Dependent Variablementioning

confidence: 61%

Changes in CEO compensation structure and the impact on firm performance following CEO turnover

Blackwell

Dudney

Farrell

2007

Rev Quant Finan Acc

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We document changes in compensation structure following CEO turnover and relate them to future performance. Compared to outgoing CEOs, incoming CEOs derive a significantly greater percentage of their compensation from option grants and new stock grants. The voluntary turnover sample shows similar changes in compensation structure while the forced turnover sample results suggest that new stock grants drive the significant increase in incentive compensation following turnover. Post-turnover performance is positively associated with new stock grants as a percentage of total compensation in the full sample and when analyzing forced and voluntary turnovers separately. We find limited evidence that future operating income is positively associated with option grants following forced turnover. Post-turnover improvement in operating income is positively associated with an increase in new stock grants for the incoming relative to the outgoing CEO.The authors appreciate the comments and suggestions on a much earlier version of the paper titled "Changes in CEO compensation and firm performance following CEO turnover" received from

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Section: Dependent Variablementioning

confidence: 61%

Changes in CEO compensation structure and the impact on firm performance following CEO turnover

Blackwell

Dudney

Farrell

2007

Rev Quant Finan Acc

Self Cite

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“…A negative relation between the likelihood of non-routine CEO turnover and firm performance is documented in studies by Coughlan and Schmidt (1985), Warner et al (1988), Weisbach (1988, Gibbons and Murphy (1990), Murphy and Zimmerman (1993), Blackwell et al (1994), andKang andShivdasani (1995). In addition, a number of studies document that the market for corporate control plays an important disciplinary role, as managerial turnover is high in firms that are targets of acquisitions, especially if their pre-acquisition performance is poor (Martin and McConnell (1991), Kini et al (1995), Hadlock et al (1999), andHarford (2000)).…”

Section: Literature Review and Hypothesesmentioning

confidence: 96%

CEO Turnover after Acquisitions: Do Bad Bidders get Fired?

Lehn

Zhao

2003

SSRN Journal

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Previous research has documented that the external control market disciplines managers who make valuereducing acquisitions. This paper finds that internal control mechanisms also discipline managers who make value-destroying acquisitions. We find a strong inverse relation between the returns to acquiring firms and the likelihood that their CEOs are subsequently fired. No significant relation exists between the probability that "bad bidders" get fired and various corporate governance characteristics, including the size and structure of boards. The results indicate that internal governance mechanisms discipline managers who stray from value-maximization. It also suggests that firms "choose" these mechanisms optimally such that no empirical relation exists between governance structure and the probability that bad bidders are fired.Classification code: G34.

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“…By using industryadjusted forecast errors in our analysis, we attempt to control for industry-wide events that affect performance. Previous research on CEO turnover decisions provides evidence suggesting that relative performance evaluation is utilized in retention decisions (e.g., Barro and Barro, 1990;Blackwell et al, 1994). Therefore, our first hypothesis predicts that there will be an inverse relation between the likelihood of CEO turnover and industry-adjusted analyst forecast errors and 3 Expectations management is consistent with the management literature regarding impressions management, which includes the idea that top management is expected to not only manage a firm's performance but also the perceptions of the firm's performance (e.g., Ginzel et al, 1992).…”

Section: One-year Forecast Errors As a Measure Of Ceo Performancementioning

confidence: 99%

The Impact of Firm Performance Expectations on CEO Turnover and Replacement Decisions

2003

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Our analysis suggests that boards focus on deviation from expected performance, rather than performance alone, in making the CEO turnover decision, especially when there is agreement (less dispersion) among analysts about the firm's earnings forecast or there are a large number of analysts following the firm. In addition, our results suggest that boards are more likely to appoint a CEO that will change firm policies and strategies (i.e., an outsider) when forecasted 5-year EPS growth is low and there is greater uncertainty (more dispersion) among analysts about the firm's long-term forecasts.

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Accounting information and internal performance evaluation

Cited by 162 publications

References 39 publications

Changes in CEO compensation structure and the impact on firm performance following CEO turnover

Changes in CEO compensation structure and the impact on firm performance following CEO turnover

CEO Turnover after Acquisitions: Do Bad Bidders get Fired?

The Impact of Firm Performance Expectations on CEO Turnover and Replacement Decisions

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