The Impact of Investment Inefficiency and Cash Holding on CEO Turnover

Subject Areas : Financial Mathematics

Masoud  Taherinia ¹ (Faculty of economic and management, Lorestan University, Khoramabad, Iran)

Received: 2020-08-23 Accepted : 2020-08-23 Published : 2020-10-01

Keywords: Cash Holding, Investment inefficiency, CEO turnover,

Abstract :

The purpose of this study is to investigate the effective of investment inefficiency and cash holding on CEO turnover. This study applies logistic regression method estimator to investigate the relationship between examine the effective of investment inefficiency and cash holding on CEO turnover of 1,309 firm-year observations in Iran for the period of 2009-2019. According to positive relation between mentioned variables, the managers' opportunism increases investment inefficiency and cash holdings of the company because inappropriate managerial decisions lead to increased risk of wrong selection for investors. In the present study, the weaknesses caused by the ambiguity of investment efficiency in market performance-based statistical models are compensated and partially covered by quantifying the relationships and implementing models. The Results will aid policy makers to evaluate disclosure rules and firms to managing their information. The study is based on the corporate accounting and financial literature and examines CEO behavioral changes that can be applied to investors, managers, standardization committees, and legislators. Unlike other research, CEO turnover has also been addressed with regard to the origin and distribution of information. This study also considers the effect of information asymmetry and market constraints by considering the cash holding to transmit firm information

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