Abstract
We identify several theories that each suggest a link between CEO turnover and changes among a firm's top non-CEO managers. We then assess these links empirically using two panel data sets. We present five main findings. First, we find that CEO and non-CEO turnover are positively associated. Second, we do not find that this association is stronger when firm performance is poor. Third, this association is driven largely by instances of outside CEO succession. Fourth, the association between CEO and non-CEO changes persists; even the year after CEO turnover, non-CEO managers are more likely to leave the firm's top management group. Fifth, changes in the identities of non-CEO managers are more closely associated with subsequent organizational changes than is CEO turnover. We interpret these results as being consistent with theories in which non-CEO managers make investments in human capital that is specific to co-workers, and specific to the firm's current practices or strategy.
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