Worth the wait? Delay in CEO succession after unplanned CEO departures

Worth the wait? Delay in CEO succession after unplanned CEO departures This paper analyzes changes in shareholder value and firm performance in relation to the delay (or lack thereof) in CEO succession. I find that, on average, delay in succession is associated with stronger performance after an unplanned CEO departure. However, the value effect of delay varies and not all firms benefit from long delay. Firms with higher stock price volatility and those whose CEO is hired away experience lower performance. These results suggest that delay affects frictions in the CEO labor market. The impact of delay is particularly important when firms have no succession plan in place. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Corporate Finance Elsevier

Worth the wait? Delay in CEO succession after unplanned CEO departures

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Publisher
Elsevier
Copyright
Copyright © 2018 Elsevier B.V.
ISSN
0929-1199
D.O.I.
10.1016/j.jcorpfin.2017.12.021
Publisher site
See Article on Publisher Site

Abstract

This paper analyzes changes in shareholder value and firm performance in relation to the delay (or lack thereof) in CEO succession. I find that, on average, delay in succession is associated with stronger performance after an unplanned CEO departure. However, the value effect of delay varies and not all firms benefit from long delay. Firms with higher stock price volatility and those whose CEO is hired away experience lower performance. These results suggest that delay affects frictions in the CEO labor market. The impact of delay is particularly important when firms have no succession plan in place.

Journal

Journal of Corporate FinanceElsevier

Published: Apr 1, 2018

References

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