Essays on Upper Echelons Theory and Top Executive Turnover and Dismissal
Date
2024
Authors
Zhang, Ziheng (Carey)
Editors
Advisors
Mount, Matt
Zhang, Stephen
Zhang, Stephen
Journal Title
Journal ISSN
Volume Title
Type:
Thesis
Citation
Statement of Responsibility
Conference Name
Abstract
This thesis comprises an introduction (Chapter 1), three main chapters (Chapters 2 to 4) that focus on the studies of chief financial officer (CFO) and chief executive officer (CEO) turnover and dismissal, and a brief conclusion. In Chapter 1, I provide an overview of the dissertation. The main theoretical aim of my dissertation is to contribute to executive turnover research within the upper echelons (Hambrick & Mason, 1984), as the theory explores how top executives influence the firm, and particularly the antecedents and consequences of turnover and succession. As the literature on CEO turnover and dismissal has garnered considerable attention from strategy scholars (Finkelstein, Hambrick & Cannella, 2009), I shift the focus from the CEO to the second-in-command officer in U.S. firms—the CFO. I demonstrate how significantly less attention has been paid to understanding the turnover and dismissal of CFOs and highlight the problems with not addressing this omission. In Chapter 2, I establish an open-access CFO turnover and dismissal database in S&P 1500 firms from 2000 to 2022 (link), drawing on an existing CEO database paper published in the Strategic Management Journal (Gentry, Harrison, Quigley & Boivie, 2021). I first examine existing literature regarding CFO turnover and dismissal and uncover the importance of classifying CFO turnover events as either voluntary or involuntary. Together with three independent coders, we code each CFO turnover observation into twelve categorizations, including deaths/illnesses, dismissals, internal reassignments, resignations, retirements, and other miscellaneous types of turnover. Each coding decision is documented with an explicit reason and evidence. The final database comprises 10,561 observations and will be updated on a yearly basis following the submission of this thesis. In the empirical section, I qualitatively and quantitatively compare my CFO database with Gentry et al.’s CEO database and examine various performance antecedents for CEO and CFO turnover and dismissal. Also, I examine the interdependence between CEO and CFO voluntary turnover. In doing so, I highlight important theoretical differences between CEO and CFO turnover and distil future research directions from these differences for advancing strategy research. In Chapter 3, I draw on stigma theory and explore a socialized account of executive dismissal by examining a potential contagion effect between CEO and CFO dismissal. By merging Gentry et al.’s CEO database with our CFO database, I analyze how different types of CEO dismissal—those for performance-related (capability-based) reasons and those for behavior-related (integrity-based) reasons—impact the likelihood of CFO dismissal. I find that both CEO capability-based and integrity-based dismissal are associated with subsequent CFO dismissal. Also, CEO integrity-based dismissal shows a stronger effect on CFO dismissal. Further, I examine how the professional and personal ties between CEOs and CFOs moderate the relationship between CEO and CFO dismissals. In Chapter 4, I investigate investor reactions to the dismissal of a CEO versus a CFO following signals of financial misconduct in the form of material weaknesses in financial reporting. Drawing on signalling theory, this study considers the within-role power differences between CEOs and CFOs as a potentially salient signal for investors, which significantly influence investor attributions of blame. I theorize that investors will react more positively to CEO dismissal when the CEO within-role power exceeds that of the CFO, and vice versa. I find support for my assertions using an event study analysis of 743 CEO and CFO dismissals in U.S. firms between 2005 and 2021. Finally, I conclude my thesis in Chapter 5, summarizing the contributions of my studies and the implications for strategy scholarship.
School/Discipline
Adelaide Business School
Dissertation Note
Thesis (Ph.D.) -- University of Adelaide, Adelaide Business School, 2025
Provenance
This electronic version is made publicly available by the University of Adelaide in accordance with its open access policy for student theses. Copyright in this thesis remains with the author. This thesis may incorporate third party material which has been used by the author pursuant to Fair Dealing exceptions. If you are the owner of any included third party copyright material you wish to be removed from this electronic version, please complete the take down form located at: http://www.adelaide.edu.au/legals