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CEO turnover in large banks : does tail risk matter?

Srivastav, Abhishek; Keasey, Kevin; Mollah, Sabur; Vallascas, Francesco

Authors

Abhishek Srivastav

Kevin Keasey

Sabur Mollah

Francesco Vallascas



Abstract

Using a unique international dataset, we show that the CEOs of large banks exhibit an increased probability of forced turnover when their organizations are more exposed to idiosyncratic tail risks. The importance of idiosyncratic tail risk in CEO dismissals is strengthened when there is more competition in the banking industry and when stakeholders have more to lose in the case of distress. Overall, we document that the exposure to idiosyncratic tail risk offers valuable signals to bank boards on the quality of the choices made by CEOs and these signals are different from those provided by accounting and market measures of bank performance and by idiosyncratic volatility. In contrast, systematic tail risk is usually filtered out from the firing decision, only becoming important for forced CEO turnovers in the presence of a major variation in the costs that the exposure to this risk generates for shareholders and the organization.

Journal Article Type Article
Publication Date 2017-08
Journal Journal of accounting and economics
Print ISSN 0165-4101
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 64
Issue 1
Pages 37-55
Institution Citation Srivastav, A., Keasey, K., Mollah, S., & Vallascas, F. (2017). CEO turnover in large banks : does tail risk matter?. Journal of Accounting and Economics, 64(1), 37-55. https://doi.org/10.1016/j.jacceco.2017.05.001
DOI https://doi.org/10.1016/j.jacceco.2017.05.001
Keywords Tail risk; CEO turnover; Bank governance
Publisher URL http://www.sciencedirect.com/science/article/pii/S0165410117300307
Additional Information This is the accepted manuscript of an article published in Journal of accounting and economics, 2017. The version of record is available at the DOI link in this record.

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Copyright Statement
© 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/







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