University of Oulu

Henry Jarva, Juha-Pekka Kallunki, Gilad Livne, Earnings performance measures and CEO turnover: Street versus GAAP earnings, Journal of Corporate Finance, Volume 56, 2019, Pages 249-266, ISSN 0929-1199,

Earnings performance measures and CEO turnover : street versus GAAP earnings

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Author: Jarva, Henry1; Kallunki, Juha-Pekka2; Livne, Gilad3
Organizations: 1Aalto University, Finland
2University of Oulu, Finland, Stockholm School of Economics, Sweden, Aalto University, Finland
3University of Exeter, United Kingdom
Format: article
Version: accepted version
Access: open
Online Access: PDF Full Text (PDF, 0.9 MB)
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Language: English
Published: Elsevier, 2019
Publish Date: 2021-02-26


Prior research reports that analysts focus on street earnings, which are measures that typically exceed GAAP earnings. Using a sample of CEO turnovers from 1993 to 2016 we show that the likelihood and speed of forced CEO turnover — but not voluntary turnover — are higher when analysts exclude income-decreasing items. The association between exclusions and forced turnovers is particularly pronounced for high magnitude exclusions. We also show that greater street exclusion of income-decreasing items, the lower CEO bonus payouts. We find that boards use audited and more conservative GAAP earnings in evaluating and dismissing CEOs, except in the recent period of 2010–2016.

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Series: Journal of corporate finance
ISSN: 0929-1199
ISSN-E: 1872-6313
ISSN-L: 0929-1199
Volume: 56
DOI: 10.1016/j.jcorpfin.2019.02.005
Type of Publication: A1 Journal article – refereed
Field of Science: 512 Business and management
Copyright information: © 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license