Doddy Setiawan(1*)

(1) Universitas Sebelas Maret
(*) Corresponding Author


The research aims at examining market reaction to CEO turnover announcements.
The samples of the research consist of 59 CEO turnover announcements during 1992-2003
periods. The author use security returns variance to examine information content of CEO
turnover announcement. Friedman and Singh (1989) argue that contextual factors
moderating the market reaction to the CEO turnover announcements. Therefore the author
considering two factors: the succession process and the origin of incoming CEO. The author
divide sample based on the succession process: routine and non-routine, and the origin of
incoming CEO: inside and outside firm. In the analyses process we observe market reaction
to: (1) all sample of CEO turnover announcement, (2) routine CEO turnover, (3) non-routine
CEO turnover, (4) inside CEO turnover, (5) outside CEO turnover, (6) routine inside CEO
turnover, (7) routine outside CEO turnover, (8) non-routine inside turnover, (9) non-routine
outside turnover. The results from security return variance test shows that there are
indifference variance returns to all sample, routine turnover, nonroutine turnover, inside
CEO, outside CEO. When the author combines the contextual factor, he find market also
does not reacts to: (1) non-routine process turnover and incoming CEO come from inside
and (2) routine process turnover and incoming CEO comes from outside. But, there are
information content from: (1) routine process turnover and incoming CEO comes from inside
and (2) non-routine process turnover and incoming CEO comes from outside. These result
shows that market react to smooth process succession (routine inside CEO turnover) because
it can reduce uncertainty and incoming CEO tend to follow previous CEO strategy. If
succession process is non-routine market prefer to candidate from outside because he will
bring a different strategy.
Keywords: CEO turnover, inside and outside CEO, routine, nonroutine

Full Text:



Article Metrics

Abstract views : 955 | views : 1555


  • There are currently no refbacks.

Copyright (c)

Journal of Indonesian Economy and Business


Editorial Team
Focus and Scope
Peer Review Process
Publication Ethics
Screening for Plagiarism


Author Guidelines
Submission Guidelines
Online Submissions
Copyright Notice
Privacy Statement
Author Fees


Author Pack
Submission Form & Manuscript Template



Reviewer Guidelines
Reviewer Acknowledgement



General Search
Author index
Title index



The Journal of Indonesian Economy and Business (print ISSN 2085-8272; online ISSN 2338-5847) is published by the Faculty of Economics and Business Universitas Gadjah Mada, Indonesia. The content of this website is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License

© 2019 Journal of Indonesian Economy and Business 
 Visitor Statistics