*3.1. CEO Turnover and Firm Performance*

Many research studies put performance among the most important causes of CEO departure (see, among others, Weisbach 1988; Parrino 1997; Eisfeldt and Kuhnen 2013). A large body of evidence shows that CEO turnover (particularly forced replacements) is inversely related to firm and industry performances (Parrino 1997; Leker and Salomo 2000; Huson et al. 2001; Brunello et al. 2003; Kato and Long 2006; Jenter and Kanaan 2015; Muravyev et al. 2010; Hu and Leung 2012, among others).

Both market-based and accounting-based performance indicators are widely discussed in the literature and, in some cases, the conclusions are not similar. Market-based performance indicators are related to firm accounting performance, and also to investors' expectations regarding the perspectives of the firm, to their culture and optimism, and also to the degree of market efficiency. Weisbach (1988), Murphy and Zimmerman (1993), and Blackwell et al. (1994) claim that companies with low performance can use accounting manipulations to change investors' expectations. Altogether, Blackwell et al. (1994) affirm that accounting-based performance seems to be more important than market-based performance to explain CEO turnover, while Murphy and Zimmerman (1993) conclude that CEO replacement is inversely related to firm performance for both measures used.

Bushman et al. (2010), Kaplan and Minton (2012), Eisfeldt and Kuhnen (2013), and Jenter and Kanaan (2015) underline also the importance of industry and market performance. Eisfeldt and Kuhnen (2013) emphasize that the weight-skills industry shocks determine CEO turnover, while idiosyncratic shocks do not strongly influence this phenomenon. Their model provides a broad explanation to better understand CEO turnovers for both performing and under-performing companies that experience voluntary CEO departures. Another result is that companies with low industry-adjusted return are more likely to have forced CEO turnovers, and also that industry performance is negatively correlated with the probability of forced turnovers.

We tested a wide range of accounting- and market-based performance indicators to obtain a better understanding of the main performance objectives considered by shareholders when they decide to change the CEO and, at the same time, to better fit this study to the Romanian economic environment. We used the return on equity (ROE) as an alternative to the stock return to overcome the effects of weak market informational efficiency (see, for example, the study of Dragotă and T, ilică 2014, regarding the market efficiency in Romania). We also analyzed if long-term return monitoring is more important

than short-term returns, to decide forced CEO turnover using a 3-year average return on assets (ROA), a 3-year average return on equity (ROE), and a 3-year average operating margin.
