We build arguments based on structural inertia theory and test them in the context of CEO succession, focusing on an under- researched type of executive turnover – CEO retirement. Using event study methodology and a sample of 200 CEO retirements, we find that, on average, an organization’s legitimacy is adversely affected when inertia-breaking changes occur in the leadership structure. Specifically, we find that, all else equal, CEO retirements elicit negative shareholder reactions. However, the magnitude of the reaction is contingent on the extent to which the succession context calls for inertia-breaking changes (i.e., recent performance, founder retirement) and on the extent to which the succession process suggests inertia-breaking changes. Overall, our results point to CEO retirement events as consequential, and at times disruptive to organizational viability, challenging an important assumption of extant succession research. We discuss implications of our findings for theory and practice.