Author(s): Michelle M. Arthur, Leslie Boni, Mary Anne Majadillas
Using hand-collected data for U.S. firms from 2009 to 2011, we present stylized facts and test four hypotheses for why firms sometimes co-announce CEO turnovers with earnings releases. We find some support for the hypothesis that co-announcements are simply the result of turnover decision events coinciding with earnings release events. Our results provide stronger support for our hypotheses that firms have incentives to make strategic decisions to co-announce the turnover with the earnings release, and that those decisions are influenced by the firm’s anticipated interactions with its sell-side analysts and the number of analysts that cover the firm. Our findings highlight practical considerations for firms, questions for analysts to ask management, and raise interesting questions for future research.