The Effects of CEO Turnover and Corporate Ownership Structure on the Value Relevance of Accounting Information
Asian Tax Journal Vol. 11 No. 4 (2010), pp. 305-322
Abstract
This study examines whether CEO turnover and corporate ownership structure affect the value relevance of accounting information, focusing on the listed firms of KOSPI from 2005 until 2009. The results of the analysis are the following. First, the accounting information of the CEO－changed firms shows the less value relevance than those of the rest firms. It appears that the higher earnings management of the CEO－changed companies induced the negative effects on the stock market. Secondly, there shows no difference in value relevance between the firms with the employed CEO and those with the owner－CEO,which does not support any hypothesis, the convergence of interest hypothesis or the entrenchment hypothesis. Thirdly, the accounting information of the firms changed to the owner－CEO shows the value relevance, modestly not less than those of the firms changed to the employed CEO. It seems due to the lower earnings management incentive of the owner－CEO than that of the employed CEO. The contribution of the study is to show that CEO turnover and/or corporate ownership structure can affect the value relevance of accounting information.
Keywords
- CEO turnover
- corporate ownership structure
- employed CEO
- owner－CEO
- value relevance
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