Governance with multiple objectives : evidence from top executive turnover in China

Eric C. CHANG, Sonia Man-lai WONG

Research output: Journal PublicationsJournal Article (refereed)peer-review

106 Citations (Scopus)


We examine the relationship between Chief Executive Officer (CEO) turnover and the performance of listed Chinese firms and obtain two results. First, we find a negative relationship between the level of pre-turnover profitability and CEO turnover when firms are incurring financial losses, but no such relationship when they are making profits. Second, there is an improvement in post-turnover profitability in loss-making firms, but no such improvement in profit-making firms. These results indicate the existence of a time-varying objective function, whereby shareholders have a greater incentive to discipline their CEOs on the basis of financial performance when their firms are incurring financial losses rather than profits.
Original languageEnglish
Pages (from-to)230-244
Number of pages15
JournalJournal of Corporate Finance
Issue number2
Publication statusPublished - 1 Apr 2009


  • Firm performance
  • Managerial turnovers
  • Multiple firm objectives
  • State ownership


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