TY - JOUR
T1 - Institutional trading, information production, and forced CEO turnovers
AU - Chemmanur, Thomas J.
AU - Hu, Gang
AU - Li, Yingzhen
AU - Xie, Jing
N1 - Funding Information:
For helpful comments and discussions, we thank Agnes Cheng, Lora Dimitrova, Ronald Masulis, Richard Sias, Laura Starks, Xuan Tian, seminar participants at Babson College, Boston College, Hong Kong Polytechnic University, Suffolk University, and University of Rhode Island, and conference participants at the European Finance Association (EFA) Meetings in Cambridge UK, the Financial Management Association (FMA) Meetings in Chicago, the Asian Finance Association (AsianFA) Conference in Changsha China, and the Southern Finance Association (SFA) Meetings in Puerto Rico. Thomas Chemmanur acknowledges funding from a Hillenbrand Family Distinguished Fellowship. Gang Hu acknowledges support from the National Natural Science Foundation of China (NSFC.72071142). Jing Xie acknowledges the financial support from Hong Kong Research Grants Council (GRF15507819). We alone are responsible for any remaining errors or omissions. The views expressed in this article are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of The Brattle Group. This paper was previously circulated under the title ?Do Institutional Investors Have Private Information about CEO Turnovers??
Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/4
Y1 - 2021/4
N2 - We analyze transaction-level data on institutional trading and examine information flows around CEO turnovers. We find that institutional trading prior to a CEO turnover is positively related to the nature of a CEO turnover (forced versus voluntary). We further find that institutions produce information partly by analyzing insider trading prior to a CEO turnover, though they are able to produce additional information independently as well. Finally, we find that trading by institutions after a forced CEO turnover with an insider as successor CEO is positively related to subsequent long-run stock returns, and realizes significant abnormal trading profits. Overall, our results are consistent with the notion that information production by institutions, and their trading making use of this information, improves the information environment around CEO turnovers.
AB - We analyze transaction-level data on institutional trading and examine information flows around CEO turnovers. We find that institutional trading prior to a CEO turnover is positively related to the nature of a CEO turnover (forced versus voluntary). We further find that institutions produce information partly by analyzing insider trading prior to a CEO turnover, though they are able to produce additional information independently as well. Finally, we find that trading by institutions after a forced CEO turnover with an insider as successor CEO is positively related to subsequent long-run stock returns, and realizes significant abnormal trading profits. Overall, our results are consistent with the notion that information production by institutions, and their trading making use of this information, improves the information environment around CEO turnovers.
KW - CEO turnover
KW - Corporate governance
KW - Forced CEO turnover
KW - Information production
KW - Institutional trading
UR - http://www.scopus.com/inward/record.url?scp=85101045139&partnerID=8YFLogxK
U2 - 10.1016/j.jcorpfin.2021.101884
DO - 10.1016/j.jcorpfin.2021.101884
M3 - Journal article
AN - SCOPUS:85101045139
VL - 67
JO - Journal of Corporate Finance
JF - Journal of Corporate Finance
SN - 0929-1199
M1 - 101884
ER -