Long-Term Firm Performance and Chief Executive Turnover: An Empirical Study of the Dynamics

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Abstract
This article examines the dynamics of chief executive turnover and its relation with firm performance, using a duration model incorporating up to ten years of firm performance. The estimation results are as follows. First, firm performance has a persistent effect on the chief executive's future turnover, except the performance in the early years of the executive's tenure. However, when we limit our analyses to the turnover in which the chief executive officer leaves the firm without retaining any other position, the effect of past performance fades more quickly. Second, after controlling for the effects of age and firm performance, the probability of chief executive turnover significantly lower in the beginning and after ten years of a chief executive's tenure.

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