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Managerial turnover and performance in outside boards: Ownership makes the difference

We examine the relationship between CEO, board and Chairman turnovers and future performance in banks with fully outside boards. Using a rich dataset on executive turnovers from Costa Rica, we find that ownership moderates the effect that control mechanisms have on performance. Our results indicate...

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Autores Principales: Lafuente, Esteban, García-Cestona, Miguel Angel
Formato: Artículo
Idioma: Inglés
Publicado: Escuela de Administración de Empresas. TEC 2019
Materias:
Gobierno corporativo
reemplazo de ejecutivos
banca
estructura de propiedad
Corporate governance
executive turnover
banks
ownership types
Acceso en línea: https://revistas.tec.ac.cr/index.php/tec_empresarial/article/view/4471
http://hdl.handle.net/2238/12794
id RepoTEC12794
recordtype dspace
spelling RepoTEC127942021-06-08T22:04:11Z Managerial turnover and performance in outside boards: Ownership makes the difference Reemplazo de ejecutivos y directores en juntas de administración externas: La estructura de propiedad hace la diferencia Lafuente, Esteban García-Cestona, Miguel Angel Gobierno corporativo reemplazo de ejecutivos banca estructura de propiedad Corporate governance executive turnover banks ownership types We examine the relationship between CEO, board and Chairman turnovers and future performance in banks with fully outside boards. Using a rich dataset on executive turnovers from Costa Rica, we find that ownership moderates the effect that control mechanisms have on performance. Our results indicate that executive turnovers followed by the appointment of outside executives (CEO and Chairman) have a positive impact on performance. On the contrary, large board replacements create organisational costs and these negatively affect performance. These results mainly hold for shareholder-oriented banks where managers and owners are more likely to be aligned. Finally, these results underline the importance of examining the effectiveness of governance mechanisms in emerging economies. More detailed information about ownership, legal framework and executive replacements can make a difference when it comes to evaluate the effectiveness of governance mechanisms. Este trabajo examina la relación entre el reemplazo de altos cargos directivos y gerenciales--CEO y miembros de la junta directiva--y el desempeño en bancos con juntas de administración totalmente externas. A partir de una amplia base de datos sobre cambios de ejecutivos y directivos en bancos de Costa Rica, encontramos que la estructura de propiedad modera el efecto entre mecanismos de control y el rendimiento económico de los bancos. Los resultados indican que los cambios de ejecutivos seguidos del nombramiento de ejecutivos externos (CEO y Presidente de la junta directiva) tienen un impacto positivo en el desempeño. Por el contrario, grandes cambios proporcionales en la junta directiva crean costos organizacionales que afectan negativamente el desempeño. Estos resultados son significativos principalmente entre los bancos privados (governados por accionistas), donde es más probable que los gerentes y propietarios estén alineados. Finalmente, estos resultados subrayan la importancia de examinar la efectividad de los mecanismos de gobierno corporativo en las economías emergentes. Información más detallada sobre la estructura de propiedad, el marco regulatorio así como de los reemplazos de ejecutivos pueden hacer la diferencia al evaluar la efectividad de los mecanismos de gobierno corporativo. 2019-11-04 2021-06-08T22:04:11Z 2021-06-08T22:04:11Z info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion https://revistas.tec.ac.cr/index.php/tec_empresarial/article/view/4471 10.18845/te.v13i3.4471 http://hdl.handle.net/2238/12794 eng https://revistas.tec.ac.cr/index.php/tec_empresarial/article/view/4471/4573 Derechos de autor 2019 TEC Empresarial application/pdf Escuela de Administración de Empresas. TEC Tec Empresarial; Vol. 13 No. 3 (2019); 2-27 TEC Empresarial; Vol. 13 Núm. 3 (2019); 2-27 1659-3359 1659-2395
institution Tecnológico de Costa Rica
collection Repositorio TEC
language Inglés
topic Gobierno corporativo
reemplazo de ejecutivos
banca
estructura de propiedad
Corporate governance
executive turnover
banks
ownership types
spellingShingle Gobierno corporativo
reemplazo de ejecutivos
banca
estructura de propiedad
Corporate governance
executive turnover
banks
ownership types
Lafuente, Esteban
García-Cestona, Miguel Angel
Managerial turnover and performance in outside boards: Ownership makes the difference
description We examine the relationship between CEO, board and Chairman turnovers and future performance in banks with fully outside boards. Using a rich dataset on executive turnovers from Costa Rica, we find that ownership moderates the effect that control mechanisms have on performance. Our results indicate that executive turnovers followed by the appointment of outside executives (CEO and Chairman) have a positive impact on performance. On the contrary, large board replacements create organisational costs and these negatively affect performance. These results mainly hold for shareholder-oriented banks where managers and owners are more likely to be aligned. Finally, these results underline the importance of examining the effectiveness of governance mechanisms in emerging economies. More detailed information about ownership, legal framework and executive replacements can make a difference when it comes to evaluate the effectiveness of governance mechanisms.
format Artículo
author Lafuente, Esteban
García-Cestona, Miguel Angel
author_sort Lafuente, Esteban
title Managerial turnover and performance in outside boards: Ownership makes the difference
title_short Managerial turnover and performance in outside boards: Ownership makes the difference
title_full Managerial turnover and performance in outside boards: Ownership makes the difference
title_fullStr Managerial turnover and performance in outside boards: Ownership makes the difference
title_full_unstemmed Managerial turnover and performance in outside boards: Ownership makes the difference
title_sort managerial turnover and performance in outside boards: ownership makes the difference
publisher Escuela de Administración de Empresas. TEC
publishDate 2019
url https://revistas.tec.ac.cr/index.php/tec_empresarial/article/view/4471
http://hdl.handle.net/2238/12794
_version_ 1796140499329875968
score 12.041584

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