CEO turnover in LBOs: the role of boards
Subject
Finance
Publishing details
IFA Working Paper
Publication Year
2015
Abstract
We examine the CEO turnover in LBOs backed by private equity funds. When a company is taken private, we fi nd that the CEO turnover decreases and is less contingent on performance. We also find that a higher involvement of the LBO sponsors, who replace the outside directors on the board after transition to private, reduces the CEO turnover and its sensitivity to performance, but improves the operating performance. These findings suggest that more inside information and effective monitoring allow private equity funds to assess CEOs' performance over a longer horizon relative to their publicly-traded counterparts.
Keywords
CEO Turnover, Private Equity, Leveraged Buyouts; Boards of Directors; Corporate Governance
Series
IFA Working Paper
Available on ECCH
No
