«Three essays on corporate boards R. Øystein Strøm A dissertation submitted to BI Norwegian School of Management for the degree of Dr.Oecon SERIES ...»
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Figure 4.2 The percentage chairman change relative to CEO change.
The line represents the chairman changes, while bars are the number of observations in a given year (right hand scale).
Per cent chairman change
Figure 4.3 The average number of new shareholder elected directors relative to CEO change.
The line represents the director changes, while bars are the number of observations in a given year (right hand scale).
1.75 1.75 56 1.50 1.50 48
1.00 1.00 32 0.75 0.75 24 0.50 0.50 16 0.25 0.25 8
“New CEO” is the percentage of new CEOs in the population of ﬁrms, “New chairman” is the percentage of new chairmen in the population of ﬁrms, and “New directors” is the percentage of new directors. “Avg.” is the average size of the change in e.g. the number of new directors, “Std.” is the standard deviation to the change, and “ N” is the number of ﬁrms for the respective variable. “Stock return” is deﬁned as the yearly stock return adjusted for dividends and stock splits. ROA is earnings before interest, taxes and extraordinary items on the book value of assets. Stock return and ROA averages and standard deviations are unweighted.
4.10. TABLES 143
Probit estimations using maximum likelihood, see (4.3) and explanations there.
“CEO turnover” is deﬁned as all turnovers, simultaneous turnover of CEO and chairman, and as forced dismissal. “Firm performance” is speciﬁed as either stock return or return on assets.
Pseudo-R2 is calculated as 1 − Lur /Lo (Woolridge, 2002, page 465) where Lur is the log-likelihood function for the estimated model, and Lo is the the log-likelihood function in the model with only an intercept. In board turbulence, the chairman’s impact has been removed in CEO and chairman turnover regressions. All regressions contain full sets of unreported year and industry dummies.
The exclusion turbulence test (Greene, 2003, p. 102) is a test of the null hypothesis that the board Turbulence coeﬃcients are both zero.
CHAPTER 4. BOARD CONTROL
The same probit model as in table 4.3 is estimated here, except that lagged dummy variables showing various deﬁnitions of busy directors have replaced the lagged Network variable.
“Firm performance” is speciﬁed as either stock return or return on assets.
Pseudo-R2 is calculated as 1 − Lur /Lo (Woolridge, 2002, page 465) where Lur is the log-likelihood function for the estimated model, and Lo is the the log-likelihood function in the model with only an intercept. In board turbulence, the chairman’s impact has been removed.
All regressions contain full sets of year and industry dummies. These are not reported.
4.10. TABLES 145
A full set of year and industry dummies are included as instruments in all regressions in addition to instruments from the explanatory variables and transformations. ‘Improved FP dummy’ is a binary variable taking the value 1 if the CEO turnover has resulted in an improved ﬁrm performance (FP). ‘Reduced FP dummy’ is a binary variable taking the value 1 if the CEO turnover led to reduced ﬁrm performance. ‘Exclusion FP dummies’ is an exclusion test (Greene, 2003, p. 102) of the two ﬁrm performance dummies for improved or reduced ﬁrm