More on Central Bankers

A relevant study:

"Central bank governor changes in emerging markets may convey important signals
about future monetary policy. Based on a new daily data set, this paper has examined the reactions of foreign exchange markets, domestic stock market indices and
sovereign bond spreads to the announcement of a central bank governor change.
The sample comprises all emerging markets with reliable data for all three financial
market indicators, covering 20 emerging economies over the period 1992-2006.
Our results show, first, that the resignation of a central bank governor negatively
affects financial markets on the announcement day, with average market reactions
between 0.5 to 1.5 percent. While these effects are economically relevant and relatively large in comparison to announcement effects known from changes in sovereign
risk ratings, we find less evidence that appointments of new governors incorporate
relevant news for investors. Second, comparing our results to the previous literature,we find that our results for emerging market economies are distinct from industrialized countries in an interesting aspect. Newly appointed central bank governors apparently suffer from a systematic credibility problem at the beginning of their tenure. In contrast to their counterparts in industrialized countries, emerging market governors initially have to face (at least) a transitory rise in inflation expectations because investors are uncertain about the true type of the central bank governor ("hawkish" vs. "dovish"). Third, the negative announcement effect for resignations is mainly driven by irregular changes, i.e. changes occurring before the scheduled end of tenure. We offer two interpretations. First, foreign exchange market participants are apparently sensitive to signals about perceived central bank independence, expecting higher inflationary bias. This also holds true, when we explicitly control for perceived changes in conservatism. Second, more generally, investors in domestic stock and international bond markets may simply demand higher risk premia due to negative policy signals from the incumbent government.
27 As we find negative announcement effects exclusively for the inflation sensitive foreign exchange market, however, our results are more in line with the hypothesis that irregular resignations send a negative signal about central bank independence to foreign exchange market participants. The governor’s degree of conservatism does not seem to matter for market reactions. Finally, there is little evidence that personal characteristics of the central banker matter for market reactions."