TY - JOUR
T1 - Earnings performance measures and CEO turnover
T2 - Street versus GAAP earnings
AU - Jarva, Henry
AU - Kallunki, Juha-Pekka
AU - Livne, Gilad
N1 - Publisher Copyright:
© 2019 Elsevier B.V.
PY - 2019/6
Y1 - 2019/6
N2 - 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.
AB - 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.
KW - 512 Business and Management
KW - CEO turnover
KW - GAAP earnings
KW - Street earnings
KW - Street exclusions
UR - http://www.scopus.com/inward/record.url?scp=85062341193&partnerID=8YFLogxK
UR - https://research.aalto.fi/en/publications/earnings-performance-measures-and-ceo-turnover-street-versus-gaap
U2 - 10.1016/j.jcorpfin.2019.02.005
DO - 10.1016/j.jcorpfin.2019.02.005
M3 - Article
AN - SCOPUS:85062341193
VL - 56
SP - 249
EP - 266
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
ER -