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Determinants of CEO severance contracts and their components and the effects of severance contracts on executive turnover

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  • Van Dalsem, Shane

Abstract

This paper identifies the determinants of executive severance contracts and their components and the effect of severance contracts on the likelihood of forced and unforced turnover. The results provide evidence that severance contracts are used as a form of insurance for incoming CEOs. The results also provide evidence that a fixed cash component and a time-dependent maturity policy in the severance contract increases the likelihood of forced turnover.

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  • Van Dalsem, Shane, 2010. "Determinants of CEO severance contracts and their components and the effects of severance contracts on executive turnover," Journal of Economics and Business, Elsevier, vol. 62(4), pages 257-272, July.
    • Handle: RePEc:eee:jebusi:v:62:y::i:4:p:257-272
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    1. Brown, Kareen & Jha, Ranjini & Pacharn, Parunchana, 2015. "Ex ante CEO severance pay and risk-taking in the financial services sector," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 111-126.
    2. Fabel, Oliver & Kolmar, Martin, 2012. "Do parachutes discipline managers? An analysis of takeover battles," International Review of Law and Economics, Elsevier, vol. 32(2), pages 224-232.

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