Analyzing the Stock Market Reaction to Management Changes in the European Automotive Sector
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- This thesis examines how the stock market reacts to CEO and chairman changes in publicly listed European automotive companies. An event study methodology is applied to 36 management changes across eight firms from 2003 to 2022, using the Fama-French five-factor model to calculate cumulative abnormal returns (CARs) over eight event windows. The results show a significant and positive stock price reaction immediately following management changes, particularly in short windows such as [0,0], [0,1], and [-1,1], with CARs of +2.19%, +2.46%, and +2.55%, respectively. No significant impact is observed over longer timeframes. Additional analyses examine the role of management type, interim status, origin and age of the new manager, outgoing manager’s tenure, and national discretion level. CEO and chairman changes both elicit positive short-term reactions, with no statistically significant difference between them. Among the characteristics tested, only chairman age and national discretion context significantly affect investor response: younger chairman appointments and high-discretion countries are associated with stronger market reactions. Interim status, origin, and CEO tenure do not show significant effects at the 5% threshold.