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

Eric C. CHANG, Sonia Man-lai WONG

Research output: Journal PublicationsJournal Article (refereed)

56 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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