CEO Turnover and Performance of State-Related Firms

The topic of incentivizing top management for achieving better company performance has been widely investigated in the framework of principal-agent problem as well as covered in empirical research. Generally, most of the papers confirm the negative association of turnover probability with firm performance. However, there is only limited evidence for Russian companies as well as even less known about the role of ownership structure in this relationship. Using Cox proportional hazard and competing risks models, and the original sample of 1353 CEOs we find evidence of the negative relationship for Russian private firms but not for state-related ones. This finding seems to be extremely robust. We show that omission of non-economic performance does not affect the estimates in any meaningful way. In addition, there is also weak evidence that higher performance volatility leads to a lower sensitivity of turnovers in private firms (insurance mechanism).