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Political change and turnovers: How do political principals consider organizational, individual, and performance information?

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  • Bong Hwan Kim

    (Seoul National University)

  • Sounman Hong

    (Yonsei University)

Abstract

This study explores whether changes in political leadership affect the survival of chief executive officers (CEOs) of Korean state-owned enterprises (SOEs). On the basis of observations of the turnovers of 18 SOEs’ executives during 2000–2015, we demonstrate that political change is significantly associated with CEO turnover, even in the presence of institutional systems designed to achieve political insularity. That association may serve as suggestive but compelling evidence of presidential interventions in top managerial turnovers in Korean SOEs. We also find that political principals may utilize organizational- or individual-level information to gauge the loyalty and competence of SOE executives. Specifically, we demonstrate that executives who have received a poor performance evaluation are more likely to resign following a political change, suggesting the existence of a negativity bias in the political consideration of performance-related information. Some personal characteristics of executives, such as their career and educational histories, also moderate the impact of political changes.

Suggested Citation

  • Bong Hwan Kim & Sounman Hong, 2019. "Political change and turnovers: How do political principals consider organizational, individual, and performance information?," Public Choice, Springer, vol. 181(3), pages 291-308, December.
    • Handle: RePEc:kap:pubcho:v:181:y:2019:i:3:d:10.1007_s11127-019-00655-x
    DOI: 10.1007/s11127-019-00655-x
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    References listed on IDEAS

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    1. Sounman Hong & Jeehun Lim, 2016. "Capture and the bureaucratic mafia: does the revolving door erode bureaucratic integrity?," Public Choice, Springer, vol. 166(1), pages 69-86, January.
    2. Holbein, John, 2016. "Left Behind? Citizen Responsiveness to Government Performance Information," American Political Science Review, Cambridge University Press, vol. 110(2), pages 353-368, May.
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    9. Sounman Hong & Taek Kyu Kim, 2017. "Regulatory capture in agency performance evaluation: industry expertise versus revolving-door lobbying," Public Choice, Springer, vol. 171(1), pages 167-186, April.
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    Cited by:

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    4. Zhu, Danyu & Gao, Xin & Luo, Zijun & Xu, Weidong, 2022. "Environmental performance and corporate risk-taking: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 74(C).

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