Share Price Reactions to Announcements of Corporate Management Changes

TL;DRAbstract

Corporate senior management play an important role in determining the future success of their organisation. In forecasting future earnings of a firm and determining an expected return on investment, the investment community is therefore concerned with the composition of this management team. Any change in the set of individuals holding the senior positions of Chief Executive Officer, Managing Director, Chairman of the Board and Chief Financial Officer or Finance Director is expected to be considered a major event for the company and to lead to a reassessment of the firm's potential earnings stream by investors. This paper examines the relationship between the announcements of senior management changes and the firm's share price performance for companies listed on the Australian Stock Exchange. It is hypothesised that the announcement of such a change will lead to abnormal share price performance. The study does not attempt to differentiate firms with a sound operational history, where

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