We are under attack: Terrorist attacks and director turnover

Abstract

Motivated by the challenge in the director turnover literature to distinguish between board-initiated dismissals (i.e., ‘clean house’) and director-initiated departures (i.e., ‘jump ship’), we study director turnover in firms local to terrorist attacks (hereafter, TA firms). We argue that director turnover following a terrorist attack is more likely to reflect directors' ‘jump ship’ decision rather than a board's ‘clean house’ decision. We find that directors have a disproportionately greater tendency to leave TA firms after an attack. Further analyses reveal that director turnover is lower when directors perceive the larger benefits or lower costs of staying in TA firms. We also find that d..