Power at the top: an examination of CEO tenure and excess churn

Abstract

This research primarily examines the relationship between CEO power and CEO tenure in Standard & Poor’s 1500 firms from 1997 to 2018. The panel regression and 2 step-system GMM models suggest that there is a strong positive relationship between CEO power and tenure. Additionally, power has a positive significant moderating effect on the performance–tenure relationship. The results are robust across crisis subsamples. This paper also investigates excess CEO churning. I find that about 1.6% of companies has excess CEO turnover. The logit models indicate that companies with powerful CEOs are less likely to experience excess turnover.