The Executive Executioner: How Bad IPO Performance Leads to Forced CEO Turnover - an empirical investigation of the relationship between IPO performance and forced CEO turnover

Sammanfattning: This study aims to evaluate the relationship between IPO performance and forced CEO turnover on companies that went public on the New York Stock Exchange between 2010-2018. We develop a composite measurement of IPO performance that is distinctive from firm performance post IPO. Our results show strong evidence that firm's IPO performance negatively correlates with forced CEO turnover. The findings could be explained by two turnover effects. First being the direct effect of the IPO performance and the second being the proxy that the IPO performance constitutes of managerial abilities. Interestingly, neither of the individual parameters that make up the composite IPO performance measure explain the relationship individually. This indicates that boards' evaluations of CEOs are based on more than solely a single parameter. The findings of a negative relationship between IPO performance and forced CEO turnover contributes to the IPO literature.