Affiliation:
1. Providence University, Taichung
2. Chihlee University of Technology, New Taipei City
Abstract
This research focuses on investigating the reasons why an overconfident chief executive officer (CEO) is forced to leave by examining CEO turnover observations from 463 Taiwan-listed companies over the period 2008 to 2016 and using the Cox semi-parametric proportional hazard model to test the reasons for CEOs being laid off. The empirical result shows that overconfidence increases a CEO’s forced turnover risk, but this risk is not significant for an overconfident CEO in a company with a high proportion of controlling shareholders on the board. In addition, an overconfident CEO’s forced turnover risk decreases when he/she has strong business and management ability. This paper contributes to the literature by demonstrating the relationship between a CEO’s forced turnover risk and control-affiliated directors as well as the CEO’s ability.
Subject
General Social Sciences,General Arts and Humanities