Firm performance and top executive turnover an empirical analysis of nse listed companies in india

Abstract

newline One of the key features of an effective corporate governance (CG) mechanism in any country is the existence of several provisions for holding accountability and penalizing for poor performance. The provision for executing top executive turnover is one way of penalizing poorly performing top executives. Several factors like the legal origin of the nation, regulatory framework and enforcement, objectivity of the board of directors are important factors in executing top executive turnover decisions. With many high profile corporate scandals impacting the corporate landscape in the last couple of decades around the world including India , there has been a rising call by investors/stakeholders for tighter regulations and enhanced scrutiny of top executives by the board of directors. Several corporate governance committees were constituted in different countries to address the concerns of stakeholders and restore investor confidence. These committees worked towards empowering the control mechanisms such as introduction of more independent directors for enhanced objectivity, constitution of different committees for matters of vital importance like audit committee, grievance redressal committee, compensation committee etc. Overall, the board is given more say in overseeing the affairs of a company. The board also appoints top executives with the expectation that they would undertake decisions which would maximize shareholder s wealth and would be beneficial to the financial health of the company at the same time. The objectives of our study are as follows: newline1. To analyze the impact of financial performance on top executive turnover in firms with different ownerships in Indian context. newline2. To analyze the impact of board independence on top executive turnover. newline3. To analyze the long term stock performance and financial performance of firms post top executive turnover. newline