Effects of CEO Turnover in Banks: Evidence Using Exogenous Turnovers in Indian Banks

Sarkar, A and Subramanian, K and Tantri, P L (2019) Effects of CEO Turnover in Banks: Evidence Using Exogenous Turnovers in Indian Banks. Journal of Financial and Quantitative Analysis, 54 (1). pp. 183-214.

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Abstract

We examine the effects of chief executive officer (CEO) turnover in banks. Incoming bank CEOs face problems of information asymmetry because banks’ operations are opaque and bank risk can change dramatically in a short time. These CEOs may therefore change bank policies to manage their personal risks. Since CEO turnover is usually endogenous, we utilize a setting in which CEO turnover is based solely on retirement age and is thus exogenous to bank performance. Consistent with our thesis, incoming CEOs increase provisioning for future delinquencies and shrink lending. Bank stock prices decline following these changes. Politically motivated lending or ever-greening cannot explain our results.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Subramanian, K
UNSPECIFIED
Tantri, P L
UNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Turnover, CEO, Banks, Indian Banks
Subjects: Finance
Finance > Financial Institutions
Depositing User: Veeramani R
Date Deposited: 30 Nov 2018 12:28
Last Modified: 01 Jul 2019 17:02
URI: http://eprints.exchange.isb.edu/id/eprint/647
Publisher URL: https://doi.org/10.1017/S002210901800056X
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/0022-1090/
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