Abstract
We examine the dynamics of firms’ internal succession methods and find that horse race successions are common among the largest U.S. firms. Although heir and horse race CEO candidates are of similar quality, the consequences of these two succession methods differ significantly. We show that horse race successions induce conflict and are detrimental to the firm but not to the newly appointed CEOs. Our findings suggest firm’s succession methods influence the CEO labor market, CEO compensation, and firm performance. These findings highlight the importance of CEO succession planning in the form of grooming an heir.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: 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.
