Introduction

Corporate governance literature has paid great attention to CEO turnover and its determinates, focusing especially on company performance, ownership structures, and internal monitoring mechanisms. Particular studies from Anglo-Saxon countries pointed out the importance of external markets for corporate control in changing poorly performing CEOs. They tried to explain how to align the interests of dispersed shareholders and powerful CEOs and cope with the entrenchment effect in public companies. In contrast, Kaplan argued that in Germany concentrated ownership allows shareholders to monitor top managers more effectively than in Anglo-Saxon countries. He underlined the lower costs of dismissing poorly performing top managers. Thus, previous studies showed that institutional context and the type of agency problem affect CEO turnover-company performance sensitivity.

Poland is an interesting example of CEO turnover and its relationship to company performance because of its corporate governance environment. It offers an interesting contrast to that in Anglo-Saxon countries but also in Germany. Company ownership in Poland is concentrated, and managerial ownership plays an important role in ownership structures. Similar to Germany, the board model is a two-tier one, but Polish supervisory boards do not operate subject to the codetermination system, and their members are solely appointed by owners due to their ownership stake. Hence, supervisory boards are controlled by dominant shareholders. In consequence, since top managers have a substantial stake in company ownership, some supervisory boards are, in reality, controlled by them. This raises the opportunity for the entrenchment effect. For this reason, among other things, supervisory boards are viewed as passive in Poland.