Company Events & EarningsCore researchInvalidNew

Item 502 Executive Departure

Updated dailyData needs: mediumshort only

2015

Fee, C. E., Hadlock, C. J., Pierce, J. R. (2015). "Forced CEO Turnover, New CEO Contracts, and CEO Pay Concessions." Journal of Financial Economics, 117(3), 654-672 (motivating reference: forced-turnover subset mechanics only, not the source of any full-population 5.02 CAR). Also Eisfeldt-Kuhnen 2013 "CEO Turnover in a Competitive Assignment Framework."

Read the paper →

In plain terms

When a company files an 8-K under Item 5.02 (executive departures, but also appointments and pay changes), this strategy bets the stock underperforms over the next 20-90 days. Most 5.02 filings are routine, so the edge is a per-ticker hypothesis tested by our validation gates, not an established research result.

How it works

8-K Item 5.02 covers departures AND appointments/elections/compensatory arrangements; most filings are neutral-to-positive routine items. Fee-Hadlock-Pierce 2015 studies forced CEO turnover mechanics (new-CEO contracts, pay concessions) on a hand-classified forced subset and reports NO base-rate CAR on the full Item 5.02 population. This family is an intentional unfiltered proxy: it shorts every 5.02 filing and lets the harness / random-shuffle-significance / cost gate decide per ticker whether the short base rate carries edge. The sibling family item_5_02_management_change_drift longs the identical event set (Huson-Parrino-Starks 2001 finds positive post-forced-turnover drift), so the two families deliberately probe opposite signs of the same ambiguous event stream.

Live results

0 times picked on its own · 28 times inside a blend (23 beat the stock) · updated 2026-07-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 28 such blended picks (23 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

SEC 8k events
Item-coded 8-K events (1.01 material agreements, 4.02 non-reliance, etc.).
Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.

Expected edge

Reported return: none on full 5.02 population (paper studies forced-turnover subset mechanics); the previously listed ~-3% CAR over 60d is an unverified in-house proxy assumption
Tested over: n/a for full population; implementation uses T+1 entry with 20/60/90d holds

Unverified in-house base-rate hypothesis (~-3% over 60d on all 5.02 events); NOT a Fee-Hadlock-Pierce result. Paper-adjacent priors exist only for the forced-departure minority; harness/random-shuffle-significance adjudicates per ticker.

Example tickers where this is likely to fire

GE WFC INTC BA BABA

Illustrative only, the signal fires based on the live data, not a fixed list.

Related families

Item 402 Non RelianceCompany Events & Earnings

When a company files an 8-K Item 4.02 saying its old financials shouldn't be trusted, the stock drops 8-15% in 3 days.

Event AwareCompany Events & Earnings

Take any base trend signal and turn it OFF for several days around earnings dates, where price reactions are too noisy/unfair to the rule.

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