Department of Finance


Date of this Version



Published in Journal of Accounting and Economics 36:1–3 (December 2003), pp. 165–196; doi: 10.1016/j.jacceco.2003.09.001 Copyright © 2003 Elsevier B.V. Used by permission.


Our analysis suggests that boards focus on deviation from expected performance, rather than performance alone, in making the CEO turnover decision, especially when there is agreement (less dispersion) among analysts about the firm’s earnings forecast or there are a large number of analysts following the firm. In addition, our results suggest that boards are more likely to appoint a CEO that will change firm policies and strategies (i.e., an outsider) when forecasted 5-year EPS growth is low and there is greater uncertainty (more dispersion) among analysts about the firm’s long-term forecasts.