Firm-level factors influencing CEO turnover in Saudi Arabia

Figures & data

Figure 1. Research model: the factors influencing CEO turnover in Saudi listed firms. Here, the dependent variable is CEO turnover, while firm performance, board size, CEO duality, CEO ownership, retirement age of CEO, board composition, CEO tenure, CEO and top executive pay, ownership structure and CEO age are independent variables.

Table 1. Summary of variables.

Variables	Explanation	Measurement
$\mathit{\text{CEO turnove}}{r}_{\mathit{\text{it}}}$	CEO turnover is a dummy variable, which takes the value of 1 when there is CEO turnover, and otherwise 0. It is our dependent variable.	1,0
$\mathit{\text{PERF}}$	is firm performance, which includes ROA, ROE, Stock Returns, and Tobin's Q. ROA is the firm's net profit over total assets annually. ROE is firm's net profit over total equity annually. Stock Returns is arithmetic average of monthly stock returns over 12 months. Tobin's Q is firm's total market capital over total assets.	Percentage
Ln(Assets)	is the natural algorithm of firm total assets annually, and measures firm size.	Natural Logarithm
Lev	is leverage, measured as a firm's total liabilities divided by total assets annually.	Percentage
VOL	is volatility, measured using the annualised standard deviation of monthly stock returns.	Standard Deviation
BS	is board size, which is the number of directors on the board in a certain year.	Number
%IB	is board composition, as the percentage of independent directors on the board in a certain year (number of independent directors divided by total number of directors).	Percentage
CEO-Dual	is CEO duality, a dummy variable that equals 1 if the CEO is the chairperson, and otherwise 0.	1,0
CEO-Shares	is the percentage of shares owned by the CEO. (total CEO-shares divided by total firm shares)	Percentage
CEO-Ex-Pay	is the CEO and top executive pay (Saudi Arabian Riyal - SAR), as the sum of CEO and senior executive salaries, allowances, in-kind benefits, and end of service bonuses, calculated annually.	Amount
$\mathit{\text{CE}}{O}^{\mathit{\text{Age}}}$	is the age of the CEO.	Number
CEO-Ten	is the CEO's tenure, as the number of years in office.	Number

Table 2. Data on Saudi CEOs 2007–2014.

	Number of CEOs	Number of changes	Percentage of CEO turnover
2007	111	19	17.12
2008	127	19	14.96
2009	135	28	20.74
2010	146	28	19.18
2011	150	25	16.67
2012	158	29	18.35
2013	163	34	20.86
2014	169	31	18.34
Total	1159	213	18.38

Table 3. Descriptive statistics.

Variables	Observations	Mean	Median	Minimum	Maximum	Standard Deviation
CEO Turnover	1153	0.185	0	0	1	0.388
ROA	1146	4.151	3.202	-77.54	43.98	10.587
ROE	1141	5.207	8.045	-983.941	56.586	37.005
Stock Returns	1152	1.089	1.103	-42.52	198.12	7.531
Tobin's Q	1146	2.039	1.331	0.131	16.927	2.228
Ln(Assets)	1148	21.359	21.133	17.2	26.798	2.06
Lev	1136	14.998	4.665	0	126.473	18.993
VOL	1144	11.859	9.639	0	280.184	11.672
BS	1153	8.447	9	4	13	1.62
%IB	1152	49.486	44.444	0	100	21.081
CEO-Dual	1153	0.032	0	0	1	0.176
CEO-Shares (%)	1123	0.918	0.001	0	45.501	3.738
CEO-Ex-Pay (SAR)	1060	7,654,556	4,789,461	0	72,095,000	8,471,274
CEO^Age	1153	50.887	51	32	80	7.265
RET^Age	1153	0.11	0	0	1	0.313
CEO-Ten	1153	5.875	4	1	39	6.477

Notes: ROA is return-on-assets, ROE is return-on-equity, Stock Returns, and Tobin's Q are performance measures. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and $\mathrm{\text{CE}}{\mathrm{O}}^{\mathit{\text{Age}}}$ is the CEO's age, and CEO-Ten is the CEO tenure.

Table 4. Correlation matrix.

	Variables	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
1	CEO Turnover	1
2	ROA	−0.152*** (0.000)	1
3	ROE	−0.154*** (0.000)	0.647*** (0.000)	1
4	Stock Returns	−0.019 (0.550)	0.011 (0.733)	0.044 (0.171)	1
5	Tobin's Q	0.058* (0.069)	−0.116*** (0.000)	−0.112*** (0.000)	0.205*** (0.000)	1
6	Ln(Assets)	−0.088*** (0.006)	0.157*** (0.000)	0.180*** (0.000)	−0.047 (0.146)	−0.576*** (0.000)	1
7	Lev	− 0.001 (0.973)	0.017 (0.606)	0.021 (0.508)	−0.051 (0.110)	−0.336*** (0.000)	0.367*** (0.000)	1
8	VOL	0.035 (0.279)	−0.187*** (0.000)	−0.070** (0.029)	0.708*** (0.000)	0.279*** (0.000)	−0.231*** (0.000)	−0.126*** (0.000)	1
9	BS	0.018 (0.573)	−0.046 (0.156)	−0.036 (0.266)	0.022 (0.484)	−0.086*** (0.007)	0.310*** (0.000)	−0.016 (0.616)	−0.010 (0.752)	1
10	%IB	0.017 (0.604)	0.039 (0.221)	0.066** (0.040)	−0.005 (0.877)	−0.019 (0.562)	−0.021 (0.523)	−0.064** (0.045)	−0.003 (0.931)	−0.015 (0.650)	1
11	CEO-Dual	0.025 (0.426)	0.052 (0.103)	0.015 (0.632)	−0.011 (0.724)	−0.009 (0.775)	−0.080** (0.012)	−0.010 (0.765)	−0.008 (0.801)	−0.131*** (0.000)	0.023 (0.468)	1
12	CEO-Shares (%)	−0.076** (0.019)	0.175*** (0.000)	0.101*** (0.002)	−0.009 (0.775)	0.012 (0.712)	−0.086*** (0.008)	−0.009 (0.789)	−0.054* (0.096)	−0.081** (0.013)	−0.054* (0.097)	0.249*** (0.000)	1
13	CEO-Ex-Pay	−0.061* (0.067)	0.082** (0.015)	0.125*** (0.000)	0.024 (0.467)	−0.217*** (0.000)	0.606*** (0.000)	0.022 (0.521)	−0.174*** (0.000)	0.300*** (0.000)	−0.001 (0.977)	−0.101*** (0.003)	0.010 (0.771)	1
14	$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	−0.021 (0.513)	0.066** (0.040)	0.040 (0.217)	−0.042 (0.186)	−0.092*** (0.004)	0.188*** (0.000)	−0.015 (0.637)	−0.078** (0.015)	0.155*** (0.000)	−0.061*** (0.058)	0.121*** (0.000)	0.294*** (0.000)	0.160*** (0.000)	1
15	$\mathrm{\text{RE}}{\mathrm{T}}^{\mathrm{\text{Age}}}$	0.042 (0.193)	0.023 (0.473)	0.030 (0.358)	0.014 (0.663)	0.009 (0.769)	0.044 (0.168)	0.020 (0.545)	0.008 (0.810)	0.051 (0.110)	−0.085*** (0.008)	0.227*** (0.000)	0.359*** (0.000)	0.050 (0.140)	0.644*** (0.000)	1
16	CEO-Ten	−0.098*** (0.002)	0.230*** (0.000)	0.119*** (0.000)	−0.008 (0.802)	−0.120*** (0.000)	0.085*** (0.008)	0.183*** (0.000)	−0.050 (0.116)	−0.101*** (0.002)	−0.081** (0.012)	0.122*** (0.000)	0.283*** (0.000)	0.107*** (0.001)	0.363*** (0.000)	0.358*** (0.000)	1

Notes: ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively; p values are in parentheses. All variables are in $y_{\mathit{t}-1}$ except CEO turnover, which is in $y_t$.

Table 5. CEO turnover and firm performance in listed Saudi firms (2007–2014).

Variables	ROA	ROE	Stock Returns	Tobin's Q
Performance	-0.0202*** (0.0053)	-0.0082*** (0.0023)	-0.0079 (0.0109)	-0.0150 (0.0308)
Ln(Assets)	-0.0704* (0.0393)	-0.0653 (0.0401)	-0.1052*** (0.0403)	-0.1161** (0.0471)
Lev	0.0055* (0.0031)	0.0050 (0.0032)	0.0072** (0.0032)	0.0072** (0.0032)
VOL	0.0035 (0.0062)	0.0046 (0.0061)	0.0080 (0.0065)	0.0068 (0.0062)
BS	0.0183 (0.0335)	0.0077 (0.0338)	0.0290 (0.0345)	0.0307 (0.0350)
%IB	0.0005 (0.0024)	0.0004 (0.0024)	-0.0001 (0.0024)	-0.0001 (0.0025)
CEO-Dual	0.4040 (0.3395)	0.3911 (0.3405)	0.4668 (0.3451)	0.4691 (0.3475)
CEO-Shares (%)	-0.0466** (0.0229)	-0.0464** (0.0229)	-0.0565** (0.0237)	-0.0569** (0.0239)
CEO-Ex-Pay	-3.94e-09 (9.39e-09)	-2.03e-09 (9.23e-09)	-6.61e-10 (9.24e-09)	1.52e-10 (9.42e-09)
CEO^Age	0.0156* (0.0081)	0.0154* (0.0082)	0.0167** (0.0084)	0.0163* (0.0085)
CEO-Ten	-0.0218** (0.0097)	-0.0228** (0.0098)	-0.0261** (0.0102)	-0.0261** (0.0103)
Likelihood ratio	43.74***	46.01***	29.46***	28.15***

Notes: This table presents the average marginal effects from the probit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, Stock Returns, and Tobin's Q are performance measures. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and CEO^Age is the CEO's age, and CEO-Ten is the CEO tenure.

Table 6. CEO turnover and firm Loss performance (monitoring effect).

Variables	ROA	ROE	Stock Returns
Loss Performance	0.4867*** (0.1226)	0.5006*** (0.1229)	0.1012 (0.1068)
Ln(Assets)	−0.0578 (0.0402)	−0.0629 (0.0404)	−0.1047*** (0.0403)
Lev	0.0052* (0.0031)	0.0052* (0.0031)	0.0071** (0.0032)
VOL	0.0038 (0.0062)	0.0027 (0.0063)	0.0067 (0.0061)
BS	0.0186 (0.0333)	0.0151 (0.0335)	0.0279 (0.0346)
%IB	0.0007 (0.0024)	0.0008 (0.0024)	−0.0002 (0.0024)
CEO-Dual	0.4379 (0.3373)	0.4334 (0.3376)	0.4675 (0.3456)
CEO-Shares (%)	−0.0455** (0.0225)	−0.0466** (0.0225)	−0.0566** (0.0238)
CEO-Ex-Pay	−2.84e-09 (9.16e-09)	−2.56e-09 (9.17e-09)	−6.17e-10 (9.26e-09)
$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	0.0149* (0.0081)	0.0157* (0.0081)	0.0167** (0.0084)
CEO-Ten	−0.0212** (0.0096)	−0.0217** (0.0097)	−0.0259** (0.0102)
Likelihood ratio	44.42***	46.09***	29.84***

Notes: This table presents the average marginal effects from the probit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, and Stock Returns are performance measures. Loss Performance equates to negative performance values, Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO age, and CEO-Ten is the CEO tenure.

Table 7. Effect of board composition regulation (DID) on CEO turnover.

Variables	ROA	ROE	Stock Returns	Tobin's Q
Treat*Post	0.0514 (0.1325)	0.0105 (0.1317)	0.0715 (0.1496)	−0.1782 (0.1609)
Treat*Performance	−0.0179 (0.0110)	−0.0105* (0.0055)	−0.0095 (0.0200)	−0.2656** (0.1341)
Treat*Post*Performance	−0.0049 (0.0132)	0.0017 (0.0063)	−0.0044 (0.0271)	0.2775** (0.1352)
Ln(Assets)	−0.0501 (0.0423)	−0.0473 (0.0434)	−0.0741* (0.0415)	−0.0801* (0.0471)
Lev	0.0049 (0.0033)	0.0050 (0.0034)	0.0067** (0.0033)	0.0069** (0.0033)
VOL	0.0061 (0.0071)	0.0065 (0.0071)	0.0122 (0.0080)	0.0104 (0.0070)
BS	0.0111 (0.0360)	0.0035 (0.0360)	0.0118 (0.0356)	0.0169 (0.0367)
CEO-Dual	0.4004 (0.3427)	0.3896 (0.3437)	0.4552 (0.3402)	0.4875 (0.3448)
CEO-Shares (%)	−0.0440* (0.0242)	−0.0433* (0.0244)	−0.0512** (0.0243)	−0.0507** (0.0247)
CEO-Ex-Pay	−8.20e-09 (1.03e-08)	−6.58e-09 (1.01e-08)	−5.20e-09 (9.78e-09)	−4.87e-09 (9.96e-09)
$\mathit{\text{CE}}{O}^{\mathit{\text{Age}}}$	0.0116 (0.0087)	0.0111 (0.0088)	0.0131 (0.0087)	0.0109 (0.0088)
CEO-Ten	−0.0180* (0.0102)	−0.0187* (0.0102)	−0.0231** (0.0100)	−0.0222** (0.0107)
Likelihood ratio	34.01***	34.57***	22.93**	27.89***

Notes: This table presents the average marginal effects from the probit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, Stock Returns, and Tobin's Q are performance measures. Treat*Post, Treat*Performance, and Treat*Post*Performance are the interactive terms among the treated group, post regulation and performance. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO age, and CEO-Ten is the CEO tenure.

Table 8. Effect of ownership structure on CEO turnover, 2008–2014.

Variables	ROA		ROE		Stock Returns		Tobin's Q
	Model (1)	Model (2)	Model (1)	Model (2)	Model (1)	Model (2)	Model (1)	Model (2)
Performance	−0.0217*** (0.0056)	−0.0207*** (0.0067)	−0.0082*** (0.0023)	−0.0090*** (0.0028)	−0.0064 (0.0109)	−0.0029 (0.0139)	−0.0020 (0.0319)	−0.0042 (0.0340)
Family	−0.1665 (0.1773)	−0.2695 (0.2010)	−0.1528 (0.1775)	−0.3187 (0.2130)	−0.1983 (0.1776)	−0.1881 (0.1790)	−0.2018 (0.1775)	−0.1637 (0.2690)
Family*Performance		0.0200 (0.0193)		0.0162 (0.0107)		−0.0204 (0.0484)		−0.0070 (0.1568)
Government	0.0335 (0.1764)	0.1410 (0.2050)	−0.0188 (0.1744)	0.2060 (0.2120)	−0.0382 (0.1726)	−0.0492 (0.1742)	−0.0339 (0.1790)	0.1233 (0.2434)
Government*Performance		−0.0154 (0.0174)		−0.0191* (0.0111)		0.0040 (0.0253)		−0.0936 (0.1147)
Foreign	−0.1751 (0.1857)	−0.2456 (0.1977)	−0.1314 (0.1850)	−0.1378 (0.1877)	−0.0951 (0.1836)	−0.0594 (0.1871)	−0.1263 (0.1863)	−0.2482 (0.2658)
Foreign*Performance		−0.0224 (0.0232)		0.0029 (0.0061)		−0.0362 (0.0341)		0.0386 (0.0710)
Ln(Assets)	−0.0684 (0.0451)	−0.0672 (0.0468)	−0.0580 (0.0461)	−0.0581 (0.0476)	−0.0931** (0.0445)	−0.0897** (0.0447)	−0.0941* (0.0535)	−0.1009* (0.0543)
Lev	0.0054* (0.0032)	0.0051 (0.0033)	0.0049 (0.0033)	0.0039 (0.0034)	0.0072** (0.0032)	0.0072** (0.0032)	0.0072** (0.0032)	0.0071** (0.0032)
VOL	0.0050 (0.0065)	0.0052 (0.0065)	0.0064 (0.0065)	0.0058 (0.0066)	0.0094 (0.0068)	0.0101 (0.0070)	0.0083 (0.0065)	0.0080 (0.0065)
BS	0.0282 (0.0353)	0.0267 (0.0356)	0.0133 (0.0356)	0.0185 (0.0359)	0.0303 (0.0349)	0.0270 (0.0350)	0.0313 (0.0352)	0.0322 (0.0356)
%IB	0.0007 (0.0026)	0.0009 (0.0026)	0.0005 (0.0026)	0.0008 (0.0026)	−0.0001 (0.0025)	0.0001 (0.0025)	−6.00e-06 (0.0025)	0.0002 (0.0025)
CEO-Dual	0.4029 (0.3437)	0.4352 (0.3456)	0.3952 (0.3447)	0.4343 (0.3489)	0.4736 (0.3439)	0.4766 (0.3440)	0.4823 (0.3443)	0.4725 (0.3460)
CEO-Shares (%)	−0.0359 (0.0236)	−0.0404* (0.0242)	−0.0373 (0.0239)	−0.0440* (0.0251)	−0.0445* (0.0242)	−0.0447* (0.0244)	−0.0438* (0.0242)	−0.0451* (0.0245)
CEO-Ex-Pay	−4.25e-09 (9.83e-09)	−4.45e-09 (1.05e-08)	−2.50e-09 (9.68e-09)	−2.47e-09 (1.02e-08)	−1.43e-09 (9.45e-09)	−1.29e-09 (9.49e-09)	−1.12e-09 (9.65e-09)	−1.56e-09 (9.83e-09)
$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	0.0128 (0.0083)	0.0142* (0.0084)	0.0131 (0.0084)	0.0136 (0.0084)	0.0138* (0.0083)	0.0142* (0.0083)	0.0128 (0.0083)	0.0131 (0.0084)
CEO-Ten	−0.0190* (0.0101)	−0.0207** (0.0101)	−0.0206** (0.0101)	−0.0219** (0.0101)	−0.0245** (0.0099)	−0.0249** (0.0099)	−0.0243** (0.0099)	−0.0246** (0.0100)
Likelihood ratio	46.37***	49.60***	47.14***	53.77***	31.07***	32.42**	29.94***	31.07**

Notes: This table presents the average marginal effects from the probit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, Stock Returns, and Tobin's Q are performance measures. Family, Government, and Foreign are firms that are classified as family-, government-, and foreign-owned, respectively, Family*Performance, Government*Performance, and Foreign*Performance are the interaction terms between the respective firm ownership and performance, Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO age, and CEO-Ten is the CEO tenure.

Table 9. Effect of high CEO ownership on CEO turnover.

	ROA		ROE		Stock Returns		Tobin's Q
Variables	Model (1)	Model (2)	Model (1)	Model (2)	Model (1)	Model (2)	Model (1)	Model (2)
Performance	−0.0204*** (0.0053)	−0.0204*** (0.0053)	−0.0084*** (0.0023)	−0.0084*** (0.0023)	−0.0077 (0.0109)	−0.0092 (0.0110)	−0.0132 (0.0309)	−0.0118 (0.0311)
High CEO Ownership	−0.4039 (0.2966)	−0.3910 (0.4791)	−0.4147 (0.2959)	−0.4314 (0.4908)	−0.5730* (0.2979)	−0.6699** (0.3256)	−0.5770* (0.3002)	−0.3870 (0.5600)
High CEO Ownership* Performance		−0.0014 (0.0404)		0.0009 (0.0218)		0.0807 (0.0861)		−0.1140 (0.2932)
Ln(Assets)	−0.0678* (0.0394)	−0.0679* (0.0395)	−0.0623 (0.0403)	−0.0622 (0.0403)	−0.1046*** (0.0406)	−0.1043** (0.0406)	−0.1140** (0.0475)	−0.1133** (0.0475)
Lev	0.0055* (0.0031)	0.0055* (0.0031)	0.0050 (0.0032)	0.0050 (0.0032)	0.0073** (0.0032)	0.0073** (0.0032)	0.0074** (0.0032)	0.0073** (0.0032)
VOL	0.0039 (0.0061)	0.0039 (0.0061)	0.0050 (0.0061)	0.0050 (0.0061)	0.0083 (0.0065)	0.0084 (0.0066)	0.0071 (0.0062)	0.0071 (0.0062)
BS	0.0210 (0.0334)	0.0210 (0.0334)	0.0101 (0.0337)	0.0100 (0.0338)	0.0320 (0.0346)	0.0320 (0.0346)	0.0335 (0.0351)	0.0339 (0.0351)
%IB	0.0006 (0.0024)	0.0006 (0.0024)	0.0005 (0.0024)	0.0005 (0.0024)	0.0000 (0.0024)	5.26e-07 (0.0024)	0.0000 (0.0025)	0.0001 (0.0025)
CEO-Dual	0.3067 (0.3323)	0.3035 (0.3448)	0.2995 (0.3332)	0.3050 (0.3571)	0.3977 (0.3380)	0.3562 (0.3450)	0.4026 (0.3403)	0.3926 (0.3410)
CEO-Ex-Pay	−4.22e-09 (9.40e-09)	−4.21e-09 (9.40e-09)	−2.29e-09 (9.24e-09)	−2.31e-09 (9.26e-09)	−7.42e-10 (9.30e-09)	−1.05e-09 (9.32e-09)	−2.12e-11 (9.49e-09)	7.19e-11 (9.49e-09)
CEO^Age	0.0138* (0.0081)	0.0138* (0.0082)	0.0137* (0.0082)	A 0.0138* (0.0084)	0.0155* (0.0085)	0.0160* (0.0085)	0.0149* (0.0086)	0.0147* (0.0086)
CEO-Ten	−0.0212** (0.0097)	−0.0211** (0.0100)	−0.0223** (0.0097)	−0.0225** (0.0101)	B -0.0258** (0.0100)	−0.0260*** (0.0100)	−0.0257** (0.0102)	−0.0249** (0.0104)
Likelihood ratio	40.32***	40.33***	42.81***	42.81***	25.83***	26.83***	24.55**	24.71**

Notes: This table presents the average marginal effect is from the probit estimation. ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. (A) means the coefficient is 0.0137975 and the standard error is 0.0083648; (B) means the coefficient is -0.0257643, and the standard error is 0.010207. ROA, ROE, Stock returns, and Tobin's Q are performance measures, High CEO Ownership is the CEO ownership of firm shares of 5% or more, High CEO Ownership*Performance is the interactive term between high CEO ownership and firm performance, Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Ex-Pay is the CEO and top executive pay, CEO^Age is the CEO age, and CEO-Ten is the CEO tenure.

Table 10. Effect of pay, retirement age, and tenure on CEO turnover.

Variables

ROA

ROE

Stock Returns

Tobin's Q

Model (1)

Model (2)

Model (3)

Model (1)

Model (2)

Model (3)

Model (1)

Model (2)

Model (3)

Model (1)

Model (2)

Model (3)

Performance

−0.0193*** (0.0053)

−0.0209*** (0.0054)

−0.0184*** (0.0053)

−0.0079*** (0.0023)

−0.0084*** (0.0023)

−0.0075*** (0.0023)

−0.0086 (0.0111)

−0.0173 (0.0117)

−0.0092 (0.0113)

−0.0237 (0.0318)

−0.0346 (0.0346)

−0.0209 (0.0303)

RET^Age

0.5869*** (0.1843)

0.4869** (0.1977)

0.2058 (0.2485)

0.6021*** (0.1912)

0.5609*** (0.1898)

0.2059 (0.2487)

0.6585*** (0.1943)

0.5223** (0.2066)

0.2164 (0.2483)

0.6779*** (0.1974)

0.5644** (0.2346)

0.2314 (0.2490)

RET^Age* Performance

0.0345 (0.0224)

0.0090 (0.0090)

0.0782** (0.0361)

0.0533 (0.0611)

RET^Age* CEO-Ten

0.0465** (0.0202)

0.0484** (0.0203)

0.0503** (0.0199)

0.0501** (0.0200)

Ln(Assets)

−0.0672* (0.0393)

−0.0661* (0.0394)

−0.0653* (0.0397)

−0.0616 (0.0408)

−0.0635 (0.0402)

−0.0600 (0.0405)

−0.1025** (0.0409)

−0.1015** (0.0408)

−0.0951** (0.0388)

−0.1205** (0.0481)

−0.1199** (0.0480)

−0.1105** (0.0449)

Lev

0.0056* (0.0031)

0.0057* (0.0031)

0.0053* (0.0031)

0.0051  (0.0032)

0.0052 (0.0032)

0.0049 (0.0032)

0.0073** (0.0032)

0.0073** (0.0032)

0.0067** (0.0031)

0.0074** (0.0032)

0.0072** (0.0032)

0.0068** (0.0031)

VOL

0.0027 (0.0063)

0.0025 (0.0063)

0.0032 (0.0064)

0.0039 (0.0063)

0.0037 (0.0063)

0.0044 (0.0064)

0.0072 (0.0067)

0.0076 (0.0068)

0.0080 (0.0068)

0.0061 (0.0064)

0.0063 (0.0064)

0.0068 (0.0063)

BS

0.0206 (0.0332)

0.0192 (0.0332)

0.0171 (0.0333)

0.0100 (0.0340)

0.0088 (0.0335)

0.0065 (0.0336)

0.0317 (0.0348)

0.0301 (0.0349)

0.0246 (0.0329)

0.0337 (0.0355)

0.0338 (0.0354)

0.0255 (0.0331)

%IB

0.0009 (0.0024)

0.0009 (0.0025)

0.0009 (0.0025)

0.0009 (0.0025)

0.0009 (0.0024)

0.0009 (0.0025)

0.0004 (0.0025)

0.0003 (0.0025)

0.0003 (0.0024)

0.0004 (0.0025)

0.0004 (0.0025)

0.0003 (0.0024)

CEO-Dual

0.3071 (0.3407)

0.3731 (0.3424)

0.1763 (0.3421)

0.2894 (0.3420)

0.3499 (0.3449)

0.1582 (0.3422)

0.3528 (0.3484)

0.3922 (0.3545)

0.2212 (0.3412)

0.3479 (0.3519)

0.3627 (0.3520)

0.2222 (0.3420)

CEO-Shares (%)

−0.0514** (0.0228)

−0.0584** (0.0234)

−0.0446** (0.0222)

−0.0517** (0.0229)

−0.0549** (0.0229)

−0.0451** (0.0222)

−0.0621*** (0.0237)

−0.0600** (0.0238)

−0.0538** (0.0224)

−0.0635*** (0.0240)

−0.0635*** (0.0239)

−0.0547** (0.0225)

CEO-Ex-Pay

−4.76e-09 (9.56e-09)

−4.93e-09 (9.61e-09)

−3.37e-09 (9.68e-09)

−3.00e-09 (9.45e-09)

−3.14e-09 (9.46e-09)

−1.56e-09 (9.54e-09)

−1.47e-09 (9.55e-09)

−1.40e-09 (9.58e-09)

−3.05e-10 (9.34e-09)

−1.64e-10 (9.74e-09)

−2.67e-10 (9.71e-09)

7.90e-10 (9.42e-09)

CEO-Ten

−0.0265*** (0.0099)

−0.0282*** (0.0100)

−0.0505*** (0.0153)

−0.0277*** (0.0102)

−0.0284*** (0.0099)

−0.0527*** (0.0154)

−0.0306*** (0.0104)

−0.0309*** (0.0105)

−0.0575*** (0.0150)

−0.0313*** (0.0105)

−0.0304*** (0.0106)

−0.0585*** (0.0151)

Likelihood ratio

50.02***

52.32***

55.47***

52.86***

53.86***

58.75***

37.32***

42.55***

43.66***

36.71***

37.49***

42.80***

Notes: This table presents the average marginal effects from the probit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, stock returns and Tobin's Q are performance measures, RET^Age is the retirement age of CEOs, RET^Age*Performance and RET^Age*CEO-Ten are the interactive terms between the CEO retirement age and performance and CEO retirement age and CEO tenure, respectively. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and CEO-Ten is the CEO tenure.

Table

Variables	Missing Observations	Available Observations
CEO Turnover	0	1153
ROA	7	1146
ROE	12	1141
Stock Returns	1	1152
Tobin's Q	7	1146
Ln(Assets)	5	1148
Lev	17	1136
VOL	9	1144
BS	0	1153
%IB	1	1152
CEO-Dual	0	1153
CEO-Shares (%)	30	1123
CEO-Ex-Pay (SAR)	93	1060
$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	0	1153
$\mathrm{\text{RE}}{\mathrm{T}}^{\mathrm{\text{Age}}}$	0	1153
CEO-Ten	0	1153

Notes: ROA is return-on-assets, ROE is return-on-equity, Stock Returns, and Tobin's Q are performance measures. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO's age, and CEO-Ten is the CEO tenure.

Table

Variables	ROA	ROE	Stock Returns	Tobin's Q
Performance	−0.0342*** (0.0093)	−0.0135*** (0.0039)	−0.0259 (0.0529)	−0.0140 (0.0189)
Ln(Assets)	−0.1259* (0.0705)	−0.1171 (0.0723)	−0.2076*** (0.0838)	−0.1876** (0.0715)
Lev	0.0104* (0.0055)	0.0095* (0.0056)	0.0135** (0.0056)	0.0133** (0.0056)
VOL	0.0059 (0.0106)	0.0077 (0.0105)	0.0115 (0.0105)	0.0135 (0.0112)
BS	0.0345 (0.0590)	0.0133 (0.0597)	0.0528 (0.0609)	0.0497 (0.0599)
%IB	0.0007 (0.0043)	0.0005 (0.0043)	−0.0005 (0.0043)	−0.0005 (0.0043)
CEO-Dual	0.8239 (0.5881)	0.7992 (0.5889)	0.9088 (0.5968)	0.9091 (0.5934)
CEO-Shares (%)	−0.0909** (0.0456)	−0.0926** (0.0461)	−0.1075** (0.0475)	−0.1068** (0.0471)
CEO-Ex-Pay	−8.26e-09 (1.77e-08)	−5.77e-09 (1.75e-08)	−1.03e-09 (1.73e-08)	−2.28e-09 (1.71e-08)
$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	0.0274* (0.0144)	0.0275* (0.0144)	0.0279* (0.0148)	0.0287** (0.0146)
CEO-Ten	−0.0412** (0.0184)	−0.0430** (0.0184)	−0.0492** (0.0192)	−0.0497*** (0.0191)
Likelihood ratio	43.87***	46.12***	28.70***	30.09***

Notes: This table presents the average marginal effects from the logit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, Stock Returns, and Tobin's Q are performance measures. Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO's age, and CEO-Ten is the CEO tenure.

Table

Variables	ROA	ROE	Stock Returns
Loss Performance	0.8319*** (0.2109)	0.8553*** (0.2109)	0.1662 (0.1873)
Ln(Assets)	−0.1025 (0.0720)	−0.1123 (0.0725)	−0.1866*** (0.0717)
Lev	0.0098* (0.0056)	0.0099* (0.0056)	0.0132** (0.0056)
VOL	0.0058 (0.0107)	0.0036 (0.0110)	0.0110 (0.0104)
BS	0.0332 (0.0584)	0.0268 (0.0585)	0.0488 (0.0600)
%IB	0.0012 (0.0044)	0.0013 (0.0044)	−0.0006 (0.0043)
CEO-Dual	0.8732 (0.5862)	0.8661 (0.5869)	0.9125 (0.5939)
CEO-Shares (%)	−0.0881** (0.0449)	−0.0902** (0.0451)	−0.1068** (0.0473)
CEO-Ex-Pay	−6.30e-09 (1.72e-08)	−5.95e-09 (1.72e-08)	−2.32e-09 (1.71e-08)
$\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$	0.0262* (0.0143)	0.0277* (0.0144)	0.0286* (0.0146)
CEO-Ten	−0.0398** (0.0182)	−0.0408** (0.0182)	−0.0490** (0.0191)
Likelihood ratio	44.72***	46.46***	30.34***

Notes: This table presents the average marginal effects from the logit estimation, where ***, **, and * represent significance at the 1%, 5%, and 10% levels, respectively. Standard errors are in parentheses. ROA, ROE, and Stock Returns are performance measures. Loss Performance equates to negative performance values, Ln(Assets) is the natural logarithm of total assets, Lev is leverage, VOL is volatility, BS is board size, %IB is the board composition, CEO-Dual is CEO duality, CEO-Shares (%) is the percentage of CEO owned shares, CEO-Ex-Pay is the CEO and top executive pay, and $\mathrm{\text{CE}}{\mathrm{O}}^{\mathrm{\text{Age}}}$ is the CEO age, and CEO-Ten is the CEO tenure.