The first essay investigates the announcement effect of management turnover on stock returns. Management turnover has been categorized into manager's resignation and manager's retirement, and further categorized into management turnover with immediate replacement and management turnover with no immediate replacement. The managers include chairman, president and CEO. The samples of management turnovers are classified into firms with good prior performance which have Tobin's Q ratio greater than the industry median, and firms with poor prior performance which have Tobin's Q ratio less than the industry median. The empirical results show some significant negative announcement effects regardless of prior performance. An explanation for these negative results is that management turnover is a signal of problems. The negative announcement effects of bad performing firms indicate that the stock market considers management turnover as an information that the firms have accumulated problems. The negative announcement effects of good performing firms indicate that the stock market considers management turnover as an information about the loss of important human capital in the firms. The second essay investigates the relations that management turnover has with performance and financial policy. The empirical results show that performance measured by Tobin's Q ratio is negatively related to management turnover significantly only in good performing firms. Management turnover, therefore, is a disciplinary function in these firms. The relation between management turnover and financial policies such as leverage policy, investment policy, and dividend policy are not significant. None of the financial policies can predict management turnover. After managers' retirement in bad performing firms, new managers have taken aggressive approaches in leverage policy and investment policy. As a result, their Tobin's Q ratio increases significantly.