Does Lead Time in CEO Succession Matter? Evidence From Planned Versus Unexpected CEO Departures

Abstract

This paper investigates whether and how lead time in CEO succession matters by comparing disruption costs in firms with planned retirements to those with unexpected CEO departures due to death or illness. Using a comprehensive manually-collected dataset of CEO turnovers from 1999 to 2008, I find evidence that firms with planned CEO retirements have significantly longer lead time and lower disruption costs. Specifically, longer lead time is associated with more favorable cumulative stock performance and firm operating performance around the outgoing CEO’s departure. In fact, firms can save approximately $136 million when there is lead time to plan for succession.

Is Turnover Relationship to Performance Linear Or U-Inverted? A Systematic Literature Review

“…There is no relationship between turnover and performance Not Significant / Irrelevant -11 (Graham et al, 2020) There is a relationship between turnover and performance Significant Linear 12 (Trunina et al, 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -13 (Kotaskova et al, 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -14 (Horváthová et al, 2020) There is no relationship between turnover and performance Not Significant / Irrelevant -15 (Hussain et al, 2020) There is a relationship between turnover and performance Significant Linear 16 (Osuizugbo, 2020) There is a relationship between turnover and performance Significant Linear 17 (Garg et al, 2019) There is a relationship between turnover and performance Significant Linear 18 (Kaldeen, 2019) There is a relationship between turnover and performance Significant Linear 19 (Jamal, 2019) There is a relationship between turnover and performance Significant Linear 20 (Rivolta, 2018a) There is a relationship between turnover and performance Significant Linear 21 (Yu et al, 2019) There is a relationship between turnover and performance Significant Linear 22 (Gao et al, 2017) There is a relationship between turnover and performance Significant Linear 23 (Shaw & Shi, 2017) There is a relationship between turnover and performance Significant Linear 24 (Burin et al, 2016) There is a significant linear relationship between turnover and performance Significant Linear 25 (Parker & Gerbasi, 2016) There is no relationship between turnover and performance Not Significant / Irrelevant -2 9 28 Qualitaive SLR/Literature Review Quantitative 115 26 (Wang et al, 2015) There is a relationship between turnover and performance Significant Linear 27 (Gaertner et al, 2015) There is a relationship between turnover and performance Significant Linear 28 (Burin et al, 2015) There is a relationship between turnover and performance Significant Linear 29 (Korsakienė et al, 2015) There is a relationship between turnover and performance Significant Linear 30 (Durukan et al, 2012) There is a relationship between turnover and performance Significant Linear 31 (Bertelli & Lewis, 2013) There is no relationship between turnover and performance Not Significant / Irrelevant -3...…”

It's a matter of time! CEO turnover and corporate turnarounds in Italy

“…Recognising the best timing for CEO turnover and anticipating the state of crisis allows a company to reduce the loss of intellectual capital, since top employees tend to leave a company in crisis. It also allows a business to better prepare for CEO succession, which, if not properly managed, tends to destroy value (Rivolta, 2018). However, research…”