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April 01, 2021
Yingzhen Li Coauthors Article on Institutional Trading and Information Flows Related to CEO Turnovers

The turnover of a CEO, whether forced or voluntary, can have significant long-term effects on the future performance of a firm. Brattle Senior Associate Dr. Yingzhen Li has coauthored an article on institutional trading and information flows surrounding CEO turnovers in the Journal of Corporate Finance.

The article, “Institutional Trading, Information Production, and Forced CEO Turnovers,” analyzes several aspects of transaction-level data on institutional trading and information flows around CEO turnovers, including:

  • Can institutions (and their affiliated analysts) produce valuable private information about the current CEO’s performance and his ability to manage the firm going forward?
  • If institutions can produce such information relevant to corporate governance, how do they acquire this information?
  • After CEO turnover, are institutions able to produce information about the incoming (new) CEO's ability to manage the firm in the future and about future firm performance under this new CEO?

The authors found that information produced by financial institutions, and their trading that uses this information, improves the flow of information around CEO turnovers. The full article, “Institutional Trading, Information Production, and Forced CEO Turnovers,” is available below.