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In December 1992, the Cadbury Committee published the Code of Best Practice which recommended that boards of publicly-traded UK corporations include at least three outside directors and that the positions of the chairman of the board and chief executive officer not be held by a single individual. The underlying presumption was that these government-sponsored recommendations would lead to enhanced board oversight. As a test of that presumption, we analyze the relation between top management turnover and corporate performance. We find that CEO turnover increased following publications of the Code, that the relationship between CEO turnover and performance was strengthened following publication of the Code, and that the increase in the sensitivity of turnover to performance was concentrated among firms that adopted the Cadbury Committee's recommendation.


Board Structure, Corporate Performance, Management Turnover

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