International Journal of Humanities and Social Science Research

International Journal of Humanities and Social Science Research


International Journal of Humanities and Social Science Research
International Journal of Humanities and Social Science Research
Vol. 3, Issue 8 (2017)

Appointment of new CEO and firm share price: Evidence from Tesco PLC, UK


Abdullahi Ahmed

This paper assessed the impact of the appointment of new CEO on the firm share price using a UK based company as a case study. The share price of a firm is influenced by several factors particularly its performance. The performance is in turn influenced by the management team, the quality of the management or trust in the management capacity of a firm could play a role in its market value. Thus, the announcement of a new management team or officers such as CEO could have far reaching effect on share price. Tesco Plc for several years witnessed decline in its share price. This informed a restructuring of the management team by appointment of a new CEO on 21st July, 2014. The paper used three window periods that is day before, on and after the announcement. Data on share price and volume of the share traded was generated from yahoo finance and simple percentage statistic was used to analyze the data. The result shows an increase of 1.91% in the company's share price before that date. The general market price of share quoted revealed on FTSE100 on the same day rather decrease by 0.31% which is an indication that Tesco Plc's share price increase cannot be attributed to the general market condition but to specific event which is announcement of the new CEO. Therefore, this paper recommended that the new CEO should be given welcome package and other incentive which may encourage him to stabilize the company's poor corporate governance thereby bringing a good reputation to the company that may cause investors to react positively.
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