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Governance with multiple objectives : evidence from top executive turnover in China
Journal of Corporate Finance
  • Eric C. CHANG, The University of Hong Kong, Pokfulam Road, Hong Kong
  • Sonia Man-lai WONG, Lingnan University, Hong Kong
Document Type
Journal article
Publication Date
  • Managerial turnovers,
  • Multiple firm objectives,
  • Firm performance,
  • State ownership
We examine the relationship between Chief Executive Officer (CEO) turnover and the performance of listed Chinese firms and obtain two results. First, we find a negative relationship between the level of pre-turnover profitability and CEO turnover when firms are incurring financial losses, but no such relationship when they are making profits. Second, there is an improvement in post-turnover profitability in loss-making firms, but no such improvement in profit-making firms. These results indicate the existence of a time-varying objective function, whereby shareholders have a greater incentive to discipline their CEOs on the basis of financial performance when their firms are incurring financial losses rather than profits.
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Copyright © 2008 Elsevier B.V.

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Citation Information
Chang, E. C., & Wong, S. M. L. (2009). Governance with multiple objectives: Evidence from top executive turnover in China. Journal of Corporate Finance, 15(2), 230-244. doi: 10.1016/j.jcorpfin.2008.10.003