Abstract
We investigate an increasingly prevalent CEO succession strategy - recruiting CEOs from the firms’ board of directors (Director-CEOs). Director-CEO appointments may be part of a planned succession because Director-CEO combine insiders’ firm-specific knowledge with outsiders’ new perspectives. Conversely, Director-CEO appointments may signal succession failures when boards could not find a new CEO. Consistent with the latter, we find that Director-CEO appointments are associated with negative market reaction, deterioration in performance, and shorter ex-post tenure. We find no evidence that poor firm quality drives the results. Overall, Director-CEO appointments are a distinct succession strategy that has important consequences for firm performance.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.