**1. Introduction**

A substantial literature base devoted to the causes and consequences of CEO succession has been developed in the last decades. Due to the key economic role played by top-executive managers, CEO turnover has become a subject of widespread attention. The decision of managerial succession stands at the crossroads of corporate finance, management, corporate governance, psychology, and sociology (Campbell et al. 2011). It can be considered a strategic decision, which helps to preserve the shareholders'/stakeholders' interest whenever major objectives of the firm are not achieved, or whenever resources of the company are not used according to a mutually agreed plan.

Although there is a large amount of literature on CEO turnover in developed countries (e.g., Parrino 1997; Kato and Long 2006; Hazarika et al. 2012), not much has been written about the difficulties in implementing the letter and spirit of corporate governance rules in this area for a transition economy. To the best of our knowledge, this is the first study considering a wide range of financial, social, political, and corporate governance determinants on CEO turnover in Romania. Little research has been conducted for Central and Eastern European (CEE) post-communist countries (Muravyev 2003 for Russia; Claessens and Djankov 1999, 2000; Muravyev et al. 2010 for Ukraine; Eriksson 2005 for Slovakia and Fidrmuc and Fidrmuc 2007 for Czech Republic). The above-mentioned studies are not entirely applicable to the Romanian case for several reasons. For example, these studies focus mainly oxn the enterprise restructuring process and its consequences from a corporate governance perspective. Moreover, even if Eastern and Central European countries have some economic and recent political similarities, important differences in terms of cultural and pre-communist political backgrounds can

be found (Filip and Raffournier 2010). In the last decades, these countries have become, to a certain extent, different in terms of the degree of economic1 and stock market development.<sup>2</sup>

This paper contributes to CEO turnover research by taking into account three new variables, namely, the foreign origin of the CEO, the CEO's gender, and also the role of government ownership in connection with political changes. We find a positive correlation between the CEO foreign origin and the likelihood of CEO turnover. CEO gender helps explain both forced and voluntary CEO turnover: women chief executives are replaced more often than men. With regards to the specific corporate governance mechanisms in companies with governmental participation, we find that government ownership interaction with political changes is positively correlated with CEO turnover. The financial crisis also has a role in explaining the CEO turnover likelihood during the analyzed period, but only for the period of sharp downturn (the year 2009).

In addition, we analyzed the influence of "classical" corporate governance characteristics on CEO turnover in Romania. We partially validated the hypotheses usually proposed by the literature. Whenever it was necessary, we adapted them to better fit to the characteristics of the Romanian financial system and regulations.

The conclusions from this paper can be interesting for researchers, analysts, practitioners, and supervision authorities, also from the perspective of the analyzed period. This paper concentrates on a period of economic turmoil, namely, the period 2005–2010. Our choice has scientific but also practical reasons. From a scientific point of view, this paper covers the Romanian listed companies, the only relevant sample in terms of corporate governance implementation and data availability. Starting from 2011, the listing criteria and, consequently, the sample of listed companies suffered numerous changes, thus it is difficult to insure the homogeneity of the database.

In terms of practical interest for the study, our analyzed period, characterized by different researchers and analysts as turbulent in terms of economic and financial evolution, requires specific interest for corporate decisions. For example, Caruso et al. (2019) performed a model-based counterfactual exercise by estimating the model for the period 1983–2007 (pre-crisis sample) and by computing forecasts for 2008–2013 based on the pre-crisis parameters. They confirmed that households' and financial corporations' debts and house prices are weakly associated with the economic cycle in the pre-crisis sample. Additionally, an abnormal deep downfall in private investment and an increase in households' savings beyond historical regularities were registered. Finally, the major changes in the fiscal deficit–GDP and debt–GDP ratios in 2008–2009 were exceptional, similar to the fiscal consolidation that followed. Furthermore, international, but also national analysts, agree in declaring that during the year 2019, there was—and in the following years, there will be—a clear deceleration of the macroeconomic indicators. On 1 October 2019, when Ms. Kristalina Georgieva was appointed Managing Director and Chairman of the Executive Board of the International Monetary Fund, her discourse was focused on Europe being on the verge of a new financial crisis. One month later, the same institution released a warning for European countries to put in place emergency plans, ready to be implemented, in the eventuality of what seems to be an imminent crisis. Also, some European countries entered into technical recession according to different financial institutions:

<sup>1</sup> The Gross Domestic Product (GDP) per capita (constant 2010 US\$) varied between 5735 US\$ for Serbia and 23437 US\$ for Slovenia in the year 2010, in a comparision which included nine CEE countries (World Bank statistics). Romania had, in 2010, a GDP per capita of 8210 US\$. Using the same CEE countries and the same database, Romania had, in 2008, the highest GDP growth rate (11.14%), but a decrease of −4.74% in 2009 (however, better than the case of the Czech Republic (−5.34%), Hungary (−6.46%), Croatia (−7.19%), and Slovenia (−8.63%)). In 2010, Romania had the slowest recovery in terms of GDP

growth rate (−3.32%) out of all nine of the analyzed CEE countries. <sup>2</sup> Romania had, in 2005, almost the least developed capital market out of all nine of the analyzed CEE countries, with a market capitalization of listed domestic companies (% of GDP) of 16.11%, whereas Poland, Hungary, and Croatia had market capitalization around 30% from GDP. Romania had an even weaker position in 2010 (8.54%), after the fall from 2008, and the gap with countries such as Poland (39.79%) and Croatia (42.76%) increased. At the same time, it can be noticed that Romania was not among the most affected countries by the crisis from the analyzed CEE countries (a decrease of market capitalization as % from GDP around 59% in 2008), while the CEE countries with the most developed capital markets had the highest drop rates (65% and above) (using the World Bank indicators).

Germany in September 2019 according to the Central Bank, and Italy according to the European Central Bank. Romania is a special case, because for the previous few years, the government led a pro-cyclical policy that is likely to increase the risk of a potential recession. Several analysts warned of the unsustainability of public policies, but also of the economic growth, with the National Bank of Romania Governor Mugur Isarescu and his counselors, as well as Nouriel Roubini in a press analysis in November 2019, being among them. At the beginning of 2020, the worst-case scenario was confirmed with the spread of the Covid-19 epidemy, that caused a big fall in most important financial markets, as well as in the Romanian one. Thus, the conclusions of the present study can be very relevant to better understand and anticipate the future period (for 2020 and beyond), that Europe, in particular, will go through.

The emerging and/or frontier markets can be of great interest for both national and foreign investors, looking for new investment opportunities and for diversified portfolios based on shares issued by companies, other than those listed on mature capital markets. Therefore, we believe that our conclusions may be of great interest for scientists, but also for analysts and other finance practitioners.

The remainder of the study is organized as follows. Section 2 provides a short description of the Romanian environment in terms of corporate governance and investors' protection. In Section 3, we present previous research on the determinants of CEO turnover and we develop the tested hypotheses, focusing on CEO diversity and on political influences. Section 4 describes the research methodology and the data set. The empirical results and discussion are then presented in Section 5, while Section 6 concludes the study.
