摘要：We explore the tradeoffs involved in having the possibility of ousting a CEO that is perceived by shareholders to be of low quality (bad type) or as badly behaved (low effort). We present the economic problem as analogous to a typical choice of a political system – similar to impeaching a nation’s president – applied to the intrafirm environment. We propose a theoretical model where uncertainty on the CEO’s ability plays a crucial role and is valued by the board of directors (or shareholders). Shareholders choose the optimal probability of ousting the CEO after receiving a bad signal on her effectiveness, given that they also value stability. Results show that this problem presents no interior solution: depending on parameter values, the board always impeaches the CEO or never does so (after a bad signal). Having this in mind, an ineffective CEO has an incentive to increase his performance, even at a personal cost, in order to achieve the threshold of performance (company earnings or profits for example) above which he is never kicked out.
关键词：impeachment;intrafirm political economy;CEO ousting;CEO turnover
