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The Pattern of Investment Surrounding CEO Retirements: UK Evidence

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The Pattern of Investment Surrounding CEO Retirements: UK Evidence. / Conyon, Martin; Florou, Annita.
In: British Accounting Review, Vol. 38, No. 3, 09.2006, p. 299-319.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

Conyon, M & Florou, A 2006, 'The Pattern of Investment Surrounding CEO Retirements: UK Evidence', British Accounting Review, vol. 38, no. 3, pp. 299-319. https://doi.org/10.1016/j.bar.2006.04.007

APA

Conyon, M., & Florou, A. (2006). The Pattern of Investment Surrounding CEO Retirements: UK Evidence. British Accounting Review, 38(3), 299-319. https://doi.org/10.1016/j.bar.2006.04.007

Vancouver

Conyon M, Florou A. The Pattern of Investment Surrounding CEO Retirements: UK Evidence. British Accounting Review. 2006 Sept;38(3):299-319. doi: 10.1016/j.bar.2006.04.007

Author

Conyon, Martin ; Florou, Annita. / The Pattern of Investment Surrounding CEO Retirements: UK Evidence. In: British Accounting Review. 2006 ; Vol. 38, No. 3. pp. 299-319.

Bibtex

@article{b91f88c6dedc4967b8a5e5e7901689d2,
title = "The Pattern of Investment Surrounding CEO Retirements: UK Evidence",
abstract = "The recent spate of corporate scandals worldwide has again raised serious concerns about the quality of corporate governance. We examine the governance effects on investment expenditure in the year of CEOretirement. Based on a sample of the 460 largest UK listed companies during 1990–1998, we find no evidence of changes in capital or research and development expenditure when CEOs are on the verge of retiring. In addition, neither board size nor leadership structure (separating the posts of CEO and chairman) influence corporate investment during the CEO's final year. However, we do show that there are some important governance effects. Cutbacks in fixed asset spending at the time of CEO departure are less likely in firms with executive-dominated boards. There is evidence that stock ownership of outside directors is associated with increased capital expenditure when the CEO retires. Finally, further analysis suggests that insider board monitoring and outsider equity ownership may act as substitute mechanisms in ensuring that retiring CEOs focus on value creating activities.",
keywords = "Board of directors, CEO turnover , Investment management , Stock compensation , Earnings management , Horizon effect",
author = "Martin Conyon and Annita Florou",
year = "2006",
month = sep,
doi = "10.1016/j.bar.2006.04.007",
language = "English",
volume = "38",
pages = "299--319",
journal = "British Accounting Review",
issn = "0890-8389",
publisher = "Academic Press Inc.",
number = "3",

}

RIS

TY - JOUR

T1 - The Pattern of Investment Surrounding CEO Retirements: UK Evidence

AU - Conyon, Martin

AU - Florou, Annita

PY - 2006/9

Y1 - 2006/9

N2 - The recent spate of corporate scandals worldwide has again raised serious concerns about the quality of corporate governance. We examine the governance effects on investment expenditure in the year of CEOretirement. Based on a sample of the 460 largest UK listed companies during 1990–1998, we find no evidence of changes in capital or research and development expenditure when CEOs are on the verge of retiring. In addition, neither board size nor leadership structure (separating the posts of CEO and chairman) influence corporate investment during the CEO's final year. However, we do show that there are some important governance effects. Cutbacks in fixed asset spending at the time of CEO departure are less likely in firms with executive-dominated boards. There is evidence that stock ownership of outside directors is associated with increased capital expenditure when the CEO retires. Finally, further analysis suggests that insider board monitoring and outsider equity ownership may act as substitute mechanisms in ensuring that retiring CEOs focus on value creating activities.

AB - The recent spate of corporate scandals worldwide has again raised serious concerns about the quality of corporate governance. We examine the governance effects on investment expenditure in the year of CEOretirement. Based on a sample of the 460 largest UK listed companies during 1990–1998, we find no evidence of changes in capital or research and development expenditure when CEOs are on the verge of retiring. In addition, neither board size nor leadership structure (separating the posts of CEO and chairman) influence corporate investment during the CEO's final year. However, we do show that there are some important governance effects. Cutbacks in fixed asset spending at the time of CEO departure are less likely in firms with executive-dominated boards. There is evidence that stock ownership of outside directors is associated with increased capital expenditure when the CEO retires. Finally, further analysis suggests that insider board monitoring and outsider equity ownership may act as substitute mechanisms in ensuring that retiring CEOs focus on value creating activities.

KW - Board of directors

KW - CEO turnover

KW - Investment management

KW - Stock compensation

KW - Earnings management

KW - Horizon effect

U2 - 10.1016/j.bar.2006.04.007

DO - 10.1016/j.bar.2006.04.007

M3 - Journal article

VL - 38

SP - 299

EP - 319

JO - British Accounting Review

JF - British Accounting Review

SN - 0890-8389

IS - 3

ER -