Abstract
While there are over 50 years of study on how CEO turnover influences corporate outcomes, there is a paucity of research on the impact of leadership changes on reputation. This study uses signaling theory to investigate the relationship between chief executive transitions and corporate reputation, as assessed by 2007 and 2008 Fortune ratings of 241 companies. On average, CEO successions improved reputations; however, companies with higher initial reputations were more likely to experience a decline in their subsequent reputations. These significant effects occurred over the short term and were not significant over the long term. The implications of these findings address how companies should manage CEO transition announcements and succession planning.
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