Shareholder Wealth Effects of CEO Departures: Evidence from the UK

University of Bristol Working Paper No. 00/497

47 Pages Posted: 4 May 2001

Date Written: October 2000


This paper examines share price behaviour surrounding announcements of CEO departures from UK firms listed on the All Share Index between 1990 and 1995. We find that many firms choose not to announce CEO departures, and that these firms have poorer performance records, and higher chances of future failure, than those firms who officially announce CEO turnover to the London Stock Exchange. The market reacts negatively to announcements of top executive departures, especially when the CEO is dismissed or leaves to take up another job. Share price reactions to the disclosure of top executive departure are significantly affected by the financial risk of the firm and whether the board announces a replacement CEO.

Keywords: Corporate governance, managerial departure, board structure

JEL Classification: G0, G3

Suggested Citation

Dedman, Elisabeth and Lin, Steve, Shareholder Wealth Effects of CEO Departures: Evidence from the UK (October 2000). University of Bristol Working Paper No. 00/497, Available at SSRN: or

Elisabeth Dedman (Contact Author)

Business School ( email )

Edge Hill University
Edge Hill University
Ormskirk, L39 4QP
United Kingdom

Steve Lin

University of Memphis ( email )

Memphis, TN 38152
Memphis, TN usa 38152-3370
United States
38152 (Fax)

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