AbstractAn important corporate spin‐off procedure is forming the spun‐off unit's management team by a parent firm, especially the selection of the spun‐off unit CEO. Using 207 completed spin‐offs with announcement and execution dates between 1994 and 2018, we investigate whether the financial expertise of spun‐off unit CEOs is an essential determinant of post‐spin‐off performance other than spun‐off unit CEOs’ other observable characteristics, including their general managerial skills. We find that the abnormal announcement returns for appointing financial expert CEOs at spun‐off units are between 2.83 and 3.14 percentage points larger than those generated for appointing non‐financial expert CEOs. Furthermore, spun‐off unit CEOs with financial expertise significantly improve spin‐off firms’ access to external capital resources and subsequent operating performance. Overall, we conclude that spun‐off unit CEOs’ financial expertise is a critical determinant of the value creation of spin‐off procedures. Our paper contributes to a growing literature on CEOs, their characteristics, and their impact on firm performance.