Item 5 02 Management Change Drift
In plain terms
When an 8-K announces a director or officer change (Item 5.02), the market typically rerates the firm over the next 1-6 months. Long for 30 to 180 days.
How it works
8-K Item 5.02 (Departure/Appointment of Directors or Officers) flags a management change. Forced CEO/CFO turnover (post-underperformance) is followed by positive multi-quarter drift as the market re-rates the firm under new leadership. Routine retirements are noise; the harness sorts the two with random-shuffle permutation + cost stress.
Live results
11 times picked on its own · 19 times inside a blend (19 beat the stock) · updated 2026-06-06Data dependencies
- Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
- SEC 8k events
Item-coded 8-K events (1.01 material agreements, 4.02 non-reliance, etc.).
Expected edge
- Reported return
- +5 to +8% over 6-12mo
- Tested over
- T+1 to T+180d
Huson-Parrino-Starks 2001; +5 to +8% over 6-12mo on forced turnover subset.
Related families
An 8-K Item 5.01 (change of control) is a rare corporate event that typically drifts higher for 1-3 months as deal terms get priced in.
When a company quietly amends its charter or bylaws, it's often putting up takeover defenses or entrenching management — historically these moves predict ~3 months of underperformance.
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.
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