A Research On Factors Affecting Top Manager Turnover In Listed Companies In China

It is reported that about 80 resignation announcements of top managers in companies listed on Shanghai and Shenzhen stock exchanges have been disclosed from 1st Dec to 22nd Dec in 2011. Reasons for such a high top manager turnover keep unknown since they have not been clarified clearly in those announcements. Top managers with company shares may leave office for cash at a favorable time point. They may also leave office with a lack of confidence in the company future, which is overstated by its sponsors. Or, they are simply dismissed by their companies due to incompetency. To identify true reasons, this paper studies the issue of top manager designation under the financial perspective. It is significant both theoretically and practically.A thorough literature review has been done on this issue. Hypotheses are made based on issue analysis with knowledge of Economics, Management, and Accounting. Statistics of listed companies are collected to test hypotheses with Logistic Regression statistical method. At the end of the paper, conclusions are stated, suggestions are made and future research directions are pointed out.Using a sample of listed company turnovers during 2006-2011, the following conclusions are reached:The probability of top manager turnovers is related negatively to performance reflecting the core operation and cost control. It is also negatively related to the percentage of share held by top managers and the issue price, while the estimated coefficient of top manager remuneration is insignificant In the further research, company performance, top manager remuneration and the issue price are found to be related positively to the probability of top manager turnover within one year after the listing of the company. While the estimated coefficient of the percentage of share held by top manager is insignificant.According to the above conclusions, this paper offers four policy suggestions:1. establishing scientific and reasonable performance evaluation system; 2.perfecting the incentive constraints mechanism; 3.cultivating effective external market; 4.improving the relevant laws and regulations.Innovations of this paper include:1.researching influence of the issue price; 2.disaggregating the comprehensive performance index; 3.reflecting the different situations under different time points.