The value relevance of top executive departures
Subtitle: evidence from the netherlands
By: by Kees Cools, Mirjam van Praag.
Contributors: Praag, Mirjam van.
Series: Discussion paper -- no. 3054; Discussion paper (Forschungsinstitut zur Zukunft der Arbeit : Online) -- no. 3054
Publisher: IZA
Published: 2007
Place of publication: Bonn, Germany
Language: eng
Format: Electronic resource
Subjects: Executives -- Dismissal of -- Netherlands.
Description: "On theoretical grounds, monitoring of top executives by the (supervisory) board is expected to be value relevant. The empirical evidence is ambiguous and we analyze three non-competing explanations for this ambiguity: (i) The positive effect on firm value of board monitoring is hidden in stock price effects due to the simultaneous occurrence of the positive real effect of monitoring and the opposing information effect. (ii) The combination of board monitoring and monitoring by other parties prevents assessing the value relevance of board monitoring in isolation. (iii) The confounding effect of a simultaneous successor appointment typically generates an upward biased estimate. Based on an analysis of price effects and trading volumes at announcement, we conclude that monitoring by the supervisory board is valued by investors: Forced departures of executive directors, also without a successor appointment, are value relevant in the Netherlands where external control mechanisms and shareholder control were virtually absent in the period studied (1991-2000)"--Forschungsinstitut zur Zukunft der Arbeit web site.
Notes: Title from PDF file as viewed on 10/22/2007.

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