Grace Lee Studies whether Generalists Beneficial to Corporate Shareholders

Assistant Professor Hye Seung (Grace) Lee’s co-authored study, “Are Generalists Beneficial to Corporate Shareholders? Evidence from Exogenous Executive Turnovers,” appears in the October 2018 volume of The Journal of Financial and Quantitative Analysis. The paper studies the impact of CEOs who are considered to be generalists. The study gathers data from 164 sudden deaths of CEOs as well as 345 non-sudden “exogenous” turnovers. The study suggests that departing CEOs with a higher “GAI” (generalist) score lead to less abnormal stock returns from turnover announcements. Further, CEOs’ and successors’ GAI scores are significantly positively related to non-sudden turnovers. Lastly, there is a positive correlation for positive stock returns to appointments of generalist successors for sudden deaths. The paper’s findings provide a market-based explanation for the generalist pay premium.