How has CEO turnover changed

We study CEO turnover – both internal (board driven) and external (through takeover and bankruptcy) – from 1992 to 2005 for a sample of large U.S. companies. Annual CEO turnover is higher than that estimated in previous studies over earlier periods. Turnover is 15.6 % from 1992 to 2005, implying an average tenure as CEO of less than seven years. In the more recent period since 1998, total CEO turnover increases to 17.4%, implying an average tenure of less than six years. Internal turnover is significantly related to three components of firm stock performance – performance relative to industry, industry performance relative to the overall market, and the performance of the overall stock market. The relations are stronger in the more recent period since 1998. We find similar patterns for both forced and unforced turnover, suggesting that some turnover labeled as unforced is actually not voluntary. There is some evidence that the increases in turnover and turnover-performance sensitivity are related to increases in block shareholder ownership, board independence, and Sarbanes-Oxley. The increases in turnover are not related to shareholder rights or corporate fraud. External turnover is not significantly related to any of the measures of stock performance over the entire sample period, or over the two sub-periods