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, https://doi.org/10.1016/j.jcorpfin.2019.02.005
Earnings performance measures and CEO turnover : street versus GAAP earnings
|Author:||Jarva, Henry1; Kallunki, Juha-Pekka2; Livne, Gilad3|
1Aalto University, Finland
2University of Oulu, Finland, Stockholm School of Economics, Sweden, Aalto University, Finland
3University of Exeter, United Kingdom
|Online Access:||PDF Full Text (PDF, 0.9 MB)|
|Persistent link:|| http://urn.fi/urn:nbn:fi-fe2019061320428
|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.
Journal of corporate finance
|Type of Publication:||
A1 Journal article – refereed
|Field of Science:||
512 Business and management
© 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/.