Financial Performance, Financial Distress, Board of Directors’ Compensation On CEO Turnover With Moderation Of Internal Experience
Abstract
The CEO is the strategist, controller and supervisor of the company with the hope of obtaining high profits. However, many shareholders felt dissatisfied with the CEO's performance in generating profits, which ultimately resulted in a change of CEO. This research aims to examine financial performance, financial distress, and board compensation on CEO turnover with internal experience as a moderator. Research object for manufacturing companies listed on the IDX for the 2019-2022 period. The research sample used a purposive sampling technique of 123 samples and the data analysis technique used logistic analysis. The results of research on financial performance which was measured using CR, ROA, DER, financial distress, as well as the CEO's internal experience as moderation had no effect on CEO turnover, but directors' compensation had an effect on CEO turnover and internal experience and directors' compensation moderated the strengthening of CEO turnover.
Keywords: CEO Turnover; Financial Performance; Financial Distress; Board of Directors Compensation; Internal Experience.
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References
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Chijoke-Mgbame, A.M., Boateng, A., Mgbame, C.O., & Yekini, K.C. (2023). Firm performance and CEO turnover: the moderating role of CEO attributes. Corporate Governance (Bingley). https://doi.org/10.1108/CG-04-2022-0190
Dana, WM, AMP, INK, & Ardiati, PNH (2021). The Effect of CR, DER, TATO, and DAR on the Performance of Manufacturing Companies Listed on the IDX.
Edi, & Cristi. (2022). The Influence of CEO Characteristics on Earnings Management in Companies Listed on the Indonesia Stock Exchange for 2016-2020. Scientific Journal of Accounting and Finance, 4 (3), 1689–1703.
Evans, J. H., Luo, S., & Nagarajan, N, J. (2013). CEO Turnover, Financial Distress and Contractual Innovations. American Accounting Association, 89(3), 990-959. https://doi.org/10.2308/accr-50688
Faisal, A., Samben, R., & Pattisahusiwa, S. (2017). Financial performance analysis. 14 (1), 6–15.
Gunawan, J. (2016). The Influence of Performance on CEO Changes in Issuers Going Public on the IDX in the 2008-2010 Period. Calyptra, 5 (1), 1–12.
He, L., Shaw, T.S., & Fang, J. (2016). Managerial Labor Market during Institutional Transition: A study of CEO compensation and voluntary turnover. Corporate Governance: An International Review, 25 (3), 167–185. https://doi.org/10.1111/corg.12187
Hu, F., & Leung, S.C.M. (2012). Top management turnover, firm performance and government control: Evidence from China's listed state-owned enterprises. The International Journal of Accounting, 47 (2), 235–262. https://doi.org/10.1016/j.intacc.2012.03.006
Jatana, C. (2022). Board characteristics and CEO turnover–performance relationship: evidence from India. Corporate Governance (Bingley), 23 (4), 766–799. https://doi.org/10.1108/CG-01-2022-0038
Jostarndt, P., & Sautner, Z. (2007). Financial distress, corporate control, and turnover management, Journal of Banking and Finance, 32(10), 2188-2204.
Kaplan, S. N., & Minton, B. A. (2006). How Has CEO Turnover Changed? Increasingly Performance Sensitive Boards and Increasingly Uneasy CEOs. NBER Working Paper, 12465. http://www.nber.org/ papers/w12465
Kusumah, A. (2020). COVID-19 and the Manufacturing Industry in Indonesia: A Light Note. Faculty of Economics and Business, University of Muhammadiyah Riau.
Leker, J., & Solomon, S. (2000). CEO turnover and corporate performance. Scandinavian Journal of Management, 16, 287–303. https://doi.org/10.1016/S0956-5221(99)00023-8
Leung, W. K., & Zhang, Y. C. (2023). A Study of Chief Executive Officer (CEO) Turnover in China.
Radjen, D., & Stanisic, N. (2017). Financial distress and managerial turnover: The case of the Republic of Serbia. Prague Economic Papers, 26 (6), 646–660. https://doi.org/10.18267/j.pep.628
Rissi, DM, & Herman, LA (2021). The Effect of Liquidity, Profitability, Financial Leverage, and Operating Cash Flow in Predicting Financial Distress Conditions. 16 (2), 68–86. https://akuntansi.pnp.ac.id/jam
Rusdama, A. (2016). Earnings Management and CEO (Chief Executive Officer) Turnover in Indonesia.
Schroeder, RG, Clark, MW, & Cathey, JM (2020). Financial Accounting Theory (12th ed.). Salemba Empat.
Srimindarti, C. (2009). The Influence of Current Ratio, Total Assets Turnover, and Return on Investment on Company Performance in the Food and Beverages Industry Listed on the IDX.
Utami, ER, Kresnawati, E., & Putje, ED (2019). The Effect of Compensation, Leverage, Company Size, and Dividends on Turnover: An Empirical Study of Banking Companies in Indonesia (Vol. 21, Issue 2). http://jurnaltsm.id/index.php/JBA
Yucha, N. (2018). Financial Distress, Financial Performance and Turnover Management of Public Companies on the IDX in 2011-2015. Ecopreneur Journal, 1 (1), 30–35. https://doi.org/http://dx.doi.org/10.51804/econ12.v1i1.195
Published
2024-05-02
How to Cite
ARDI, Hernando; HANDOKO, Jesica.
Financial Performance, Financial Distress, Board of Directors’ Compensation On CEO Turnover With Moderation Of Internal Experience.
E-Jurnal Akuntansi, [S.l.], v. 35, n. 3, may 2024.
ISSN 2302-8556.
Available at: <https://ojs.unud.ac.id/index.php/akuntansi/article/view/111691>. Date accessed: 05 apr. 2025.
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