Management Turnover Through Deaths of Key Executives: Effects on Investor Wealth.

Worrell, Dan L.; Davidson, Wallace N.; Chandy, P. R.; Garrison, Sharon

doi:10.2307/255939

Cited by 95 publications

(49 citation statements)

References 42 publications

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“…Event studies have been employed in the literature to assess the impact both of regular required announcements (such as financial earnings statements), unexpected events, such as the senior executive death (Worrell et al, 1986) and disclosure of on-going projects, such as R&D (Narayanan et al, 2000), new product launches (Chaney et al, 1991), and FDA decisions on NDAs (Torabzadeh et al, 1998). Thus the method has a well established track record for assessing shareholder responses to incremental announcements of on-going corporate activities.…”

Section: Methodsmentioning

confidence: 99%

Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms

Namara

Baden‐Fuller

2007

Research Policy

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We explore a financial returns dimension of the exploration-exploitation dilemma. Using 1277 R&D announcements by 178 listed bio-pharmaceutical firms, we examine whether investors are myopic along the continuum of exploration (patenting and preclinical trials) to exploitation (human clinical trials and NDA). We find that investors respond positively at every stage, but there are differences between small and large firms. For small firms exploration is favored, provided it is focused. For large firms, there is value in both exploration and exploitation. Projects which are part of an alliance are no more likely to generate abnormal returns. Policy implications are discussed.

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Section: Methodsmentioning

confidence: 99%

Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms

Namara

Baden‐Fuller

2007

Research Policy

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“…Research on unexpected CEO deaths further highlights the importance of adopting a succession plan, or at the very least, having an internal successor candidate pool. Specifically, research found that while an unexpected death of a key executive is associated with negative shareholder reactions (Worrell et al, ), an unexpected CEO death combined with internal succession is related to positive shareholder reactions (Worrell and Davidson, ). Overall, empirical evidence supports the idea that succession announcements are strategically important organizational disclosures that significantly influence stock performance.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Riding off into the Sunset: Organizational Sensegiving, Shareholder Sensemaking, and Reactions to CEO Retirement

Bilgili

Campbell

Ellstrand

et al. 2017

J Management Studies

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We test hypotheses derived from resource dependence and sensemaking/sensegiving theoretical lenses in the context of CEO succession, focusing on an under‐researched yet prevalent type of executive turnover – CEO retirement. Using event study methodology and a sample of CEO retirements from S&P 1500 firms during the 2003–12 period, we find that, all else equal, shareholders’ perceptions of organizations’ capacity to serve their interests are adversely affected when a retirement related change occurs in the leadership structure. Specifically, in line with resource dependence theory, we find that CEO retirement disclosures typically generate negative abnormal returns. Furthermore, in line with the sensemaking perspective, we find that the magnitude of shareholders’ reactions is contingent on the lexical sensegiving cues contained in the organizational narratives that are released to capital markets via executive retirement announcements. Overall, our theory and results point to CEO retirement events as consequential in the eyes of shareholders, challenging an important assumption of extant succession research. Moreover, they suggest that shareholders’ interpretation of these events is influenced by organizational sensegiving, highlighting the important role of organizational communication around succession events.

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“…Numerous studies have underscored the different characteristics for the two types of successions and explored the antecedents to such successions at the top management level (Helmich & Brown, 1972;Zajac, 1990). Their focus, however, has mostly been on the organizational causes of top management successions for triggering different types of successions (Dalton & Kesner, 1985;Worrell et al, 1988). Oftentimes, the impact of such successions on organizational performance is largely unattended.…”

Section: Succession Typementioning

confidence: 99%

The Performance Consequences of Top Management Successions

Lin¹,

Li²

2004

Group & Organization Management

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As an exploratory step toward integrating differing views in the field of top management succession, this study takes an open system's perspective and examines the effect of top management succession on organizational performance, in particular decision-making accuracy, under conditions where various organizational and environmental factors can interact. Through a formal computer simulation model that captures the basic behaviors of human decision making and the fundamental characteristics of organizational and environmental settings, the results show that whether top management successions may affect organizational performance, and if so, how organizational performance may be affected, depends on such contextual variables as industry environment, organizational structure, succession type, and organizational age. This study has also demonstrated the importance of moving toward a more systematic and precise contingency approach and the power of computer modeling in understanding the multilevel process of top management succession in complex and dynamic organizations.

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Management Turnover Through Deaths of Key Executives: Effects on Investor Wealth.

Cited by 95 publications

References 42 publications

Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms

Shareholder returns and the exploration–exploitation dilemma: R&D announcements by biotechnology firms

Riding off into the Sunset: Organizational Sensegiving, Shareholder Sensemaking, and Reactions to CEO Retirement

The Performance Consequences of Top Management Successions

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