When the stock performs poorly, the board of directors might react by replacing the CEO. In some corporations, however, the senior executives are entrenched because boards of di- rectors do not have the will to replace them. Often the reluctance to fire results because the board members are close friends of the CEO and lack objectivity. In corporations in which the CEO is entrenched and doing a poor job, the expectation of continued poor perfor- mance will decrease the stock price.