CEO Mobility and Corporate Payouts

Jean Canil, Sigitas Karpavičius*, Chia Feng Yu

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

We examine how chief executive officer (CEO) mobility affects corporate payouts. We exploit US state courts’ staggered adoption of the inevitable disclosure doctrine (IDD) to obtain exogenous variation in mobility. We report several findings. First, we find that firms in IDD-adopting states increase dividend payouts, whereas the effect of IDD on share repurchases is insignificant relative to firms not in IDD-adopting states. Second, the increase in dividends is concentrated on firms run by CEOs having high ability. Third, CEOs increasing dividends are less likely to be forced to leave their jobs. Fourth, the increase in dividends is concentrated on firms run by early-career CEOs rather than retiring CEOs. Last, CEOs increasing dividends receive more favorable shareholders’ say on pay votes for higher pay. Our evidence supports the notion that restricted mobility induces CEOs to choose a dividend policy that enhances their positions with their shareholders.

Original languageEnglish
Pages (from-to)1743-1778
Number of pages36
JournalJournal of Business Finance and Accounting
Volume50
Issue number9-10
DOIs
Publication statusPublished - 2023

Keywords

  • career concerns
  • dividends
  • inevitable disclosure doctrine
  • managerial mobility
  • share repurchase

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