We first analyze CEO turnover-to-performance sensitivities separately for the adopting and the local standards samples with model (2) below (firm subscripts are suppressed).
The dependent variable, CEO-Turnover, is an indicator equal to 1 if there is a CEO turnover in year t, and 0 otherwise. Post is an indicator variable, equal to 1 if the firm-year is post-event year 0, otherwise (event year 0 itself is removed from the analysis). We include the explanatory variables from our earlier adoption decision regression (except for ROA and RET) to control for firms’ incentives to adopt international accounting standards and their potential impact on CEO turnover. These variables are measured around year t. We also include country, year, and industry dummy variables in the regression. Statistical tests are conducted using robust standard errors clustered by firm.