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The effect of CEO departure on target firms’ post-takeover performance: Evidence from not-delisting target firms

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  • Demirtas, Gul
  • Simsir, Serif Aziz

Abstract

Using a sample of target firms that do not delist from the stock market after a majority takeover, we investigate the effect of the target CEO's departure on their firms’ subsequent financial performance. We find that CEO departures have a positive effect on the target firms’ long-run operating performance, measured by firms’ operating return on assets and return on equity. However, we do not find a significant effect of CEO turnover on target stock returns in the post-takeover period. These results are consistent with the predictions of the inefficient management hypothesis, which contrast with those of the valuable management hypothesis.

Suggested Citation

  • Demirtas, Gul & Simsir, Serif Aziz, 2016. "The effect of CEO departure on target firms’ post-takeover performance: Evidence from not-delisting target firms," Finance Research Letters, Elsevier, vol. 16(C), pages 55-65.
    • Handle: RePEc:eee:finlet:v:16:y:2016:i:c:p:55-65
    DOI: 10.1016/j.frl.2015.10.012
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    3. Zuluaga Arango, Paula & Rincón, Diego Useche & RojasBerrio, Sandra Patricia, 2023. "Relevancia, evolución y tendencias de la supervivencia empresarial. Una revisión de literatura en finanzas," Revista Tendencias, Universidad de Narino, vol. 24(1), pages 252-278, January.

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    More about this item

    Keywords

    Corporate takeover; Acquisition performance; CEO turnover;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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