OWNERSHIP STRUCTURE AND TOP EXECUTIVE TURNOVER

We report that ownership structure significantly affects the likelihoo d of a change in top executive, Controlling for stock price performanc e, the probability of top executive turnover is negatively related to the ownership stake of officers and directors and positively related t o the presence of an outside blockholder. In addition, the likelihood of a change in top executive is significantly less sensitive to stock price performance in firms with higher managerial ownership. Finally, we document an unusually high rate of corporate control activity in th e twelve months preceding top executive turnover. We conclude that own ership structure has an important influence on internal monitoring eff orts and that this influence stems in part from the effect of ownershi p structure on external control threats.