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  • Open Daily: 10am - 10pm
    Alley-side Pickup: 10am - 7pm

    3038 Hennepin Ave Minneapolis, MN
    612-822-4611

Open Daily: 10am - 10pm | Alley-side Pickup: 10am - 7pm
3038 Hennepin Ave Minneapolis, MN
612-822-4611
Limits to Relative Performance Evaluation: Evidence from Bank Executive Turnover

Limits to Relative Performance Evaluation: Evidence from Bank Executive Turnover

Office of the Comptroller of the Currenc

Paperback

General Reference

ISBN10: 1505310172
ISBN13: 9781505310177
Publisher: Createspace
Published: Jan 1 2015
Pages: 38
Weight: 0.25
Height: 0.08 Width: 8.50 Depth: 11.02
Language: English
This paper revisits the topic of relative performance evaluation (RPE) of top management using a large panel of community banks. We show that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. Our empirical results indicate that weak downturn-linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in better-governed banks, which are more likely to engage in value-enhancing disciplinary actions. Our analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality.

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