Study title
CEO Turnover and Voluntary Information Disclosure: How Managemet "Impress" or "Fail to Impress" Directors and Shareholders
Ref study 12487
Study language English
Contributing institutions
  • Reporting
  • Corporate governance
  • disclosure
  • CEO turnover
  • Symbolic Management
  • Impression Management
Geographical space
This research project deals with the role of voluntary information disclosure in corporate governance and CEO turnover. CEO turnover refers to any voluntary or involuntary departure of the chief executive. If boards and shareholders assume their governance duty and vigilantly monitor CEOs effort, CEO turnover is expected to be negatively related to poor company performance. In situations charatecterized by high levels of ambiguity, however, monitors dispose of only limited information regarding the actions of the CEO and in the event of financial distress they are often unable to discern between failure due to bad management or shirking and failure due to environmental circumstances. Therefore, they must rely on various sources providing them with the information necessary in order to accurately assess CEO's effort.

Voluntary information disclosure refers to information that is not audited and not disseminated through public media or financial analysts. On the contrary, the amount, frequency and content of voluntary information disclosure are determined by the CEO. Examples include e.g. interim (quarterly) reports, earnings forecasts, press releases, all forms of ad-hoc-publicity and profit warnings. Thus, voluntary information disclosure is supposed to reduce the information asymmetries between the CEO and her monitors. However, because such information may affect the stock price, CEOs have incentives to creatively manage the frequency, amount and content of voluntary information disclosure. In particular, they will be very careful in how to justify bad performance. Namely, information is not a condidered a commodity that can be purchased and dealt with freely on markets. Rather, both sender and receiver interpret information based on processes of sense-making and sense-giving. Earlier research on performance justification has found that CEOs adopt various strategies in order to avoid blame for failure and in order to signal control over the situation. Extant research has also found that a creative management of impressions may result in favourable judgements by important constituencies even in the event of overtly illegal actions by CEOs.
Against this background, the open questions that remain to be answered are a) whether monitors take the effort to ascertain that the company adopts an effective information policy and b) whether CEOs by means of managing voluntary information disclosure succeed in thwarting their own removal. In order to investigate these issues a theoretical framework based on agency, symbolic management and impression management theories shall be adopted. The hypothesis shall be tested by using a panel of top 140 Swiss companies quoted at the SWX stock exchange during the period 2000-2006. Modelling techniques will include dynamic panel models (GMM), logit models and, models that correct for sample selection bias (bivariate probit). The study is conducted at the Kellogg School of Management, the Department of Management and Organizations, Northwestern University, IL, USA under the supervision of Prof. Edward Zajac.
Methods (description)
Methods (instruments)
Replicated study No
Financed by
Ethical approval No
Study type
Data availability
Source (Updates) Web
Date created 21.09.2016
Date modified 21.09.2016
Start - End date 01.01.2007 - 31.01.2008