Published: 24 June 2019

Top paper prize awarded to Dr Christos Mavis

Dr Christos Mavis has been awarded with the Top Paper in Financial Management prize for his publication Does Firing a CEO Pay Off? in the Financial Management journal, Spring 2019 issue.

Christos was invited to present his published work over a special session in the Financial Management Association Conference in Glasgow in June 2019.

The paper “Does Firing a CEO Pay Off?” examines whether firing an acquisitive CEO from the helm of the firm pays off for the shareholders and the firm in general. Dismissed CEOs appear to have worse acquisition performance and significantly lower long-run performance compared to their successors. In fact, successor CEOs seem to be better in conducting more optimal investments (including CAPEX and R&D). Corporate governance, hedge fund ownership, and CEO experience are a function of this performance improvement.

Christos said: "This is an important question that had not been previously addressed; when a CEO makes bad investment decisions should a firm force them out of their jobs? And if so, will the successor make better investments and improve the performance of the firm? The short answer is yes! High fees, golden parachutes and other severance packages of millions of dollars make Boards reluctant in dismissing a CEO. However, as we highlight in our research, the average-size firm can earn a whopping $273 million from the acquisition investments and make more optimal investments under their new CEO. This is significant evidence that should be taken under consideration when corporations decide on important decisions such as firing or not their CEOs."


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