A Role-Specific Perspective on Managerial Succession: The Case of New CFO Origin

Abstract

Our paper contributes to the literature on executive successors other than the CEO by adding empirical evidence for CFO succession. We propose that the selection of outside successors may be contingent on the succession context and on the type of managerial role. We postulate that transferability of CFO-specific skills across firms and industries reduces impediments to selecting successors from outside the firm and industry. Empirical evidence on 145 CFO and 159 CEO changes reveals two key findings: outside CFO nominations are more frequent, and outside CFO succession has a more accentuated link with poor presuccession firm performance than outside CEO succession.