CEO Pay Cuts and Forced Turnover: Their Causes and Consequences PoorSatisfactoryGoodVery GoodExcellent Be the first. (0 ratings) Log in to rate this article. CFA Digest August 2012 | Vol. 42 | No. 3 Source: CFA InstituteHuasheng Gao Jarrad Harford Kai LiMark A. Harrison, CFA (Reviewer) Abstract Incentive mechanisms, such as CEO pay cuts and CEO forced turnover, can be used by company boards to help overcome the principal–agent conflict. The authors show that after a pay cut, CEO pay for performance is abnormally high. After both pay cuts and forced turnovers, CEOs reduce investment and leverage and performance improves. Pay cuts and forced turnovers appear interchangeable in terms of instigating performance improvements. View more information Topics Corporate Finance : Capital Investment Decisions · Corporate Governance Credits · About the CE Program 0 CE (including 0 SER) Record credits Credits recorded Members, log in to record your credits. Manage CE Credits Loading ...