Organizational Growth and Succession Patterns

Outsider CEO succession and firm performance

“…This is consistent withHelmich (1974) who finds that when the CEO successor is an outsider the firm's rate of growth increases.…”

“…For example, Helmich (1974) finds that post-succession growth increases for all sample firms, but more so for those which appoint outsider successors. Denis and Denis (1995) suggest that operating performance improves significantly after forced CEO turnovers as opposed to small improvements following turnovers associated with normal retirements.…”

The Importance of Board Quality in the Event of a CEO Death

“…Some studies suggest that executives appointed from outside the firm are more likely to change company policies than executives from inside the firm. Helmich (1974), for example, finds the increase in firm growth is greater when a CEO is hired from outside the firm. Additionally, the stock price reaction to top management turnover suggests that stockholders generally benefit when a firm hires a CEO from outside the firm.…”

The Stock Market Effects of CEO Succession in Bankrupt Firms

“…Many other researchers such as Dalton and Kesner (1983) Friedman and Singh (1989) Helmich (1975;1976), Helmich and Brown (1972) and Reinganum (1985) have documented that inside succession generally occurs more frequently than outside succession.4 Using the percentages of insiders/ outsiders from these studies to develop expected frequencies for our sample, we recomputed the x2 statistics. We make these comparisons because the reported incidence of inside succession has dominated outside succession in prior research, and we want to demonstrate that the comparison to our control sample yields similar results when compared to much other prior research on general succession.…”

“…Prior research has demonstrated that inside succession is considerably more common than outside succession (Dalton & Kesner, 1983;Friedman & Singh, 1989;Helmich, 1975;Helmich, 1976;Helmich & Brown, 1972;Reinganum, 1985). However, because our sample contains only poorly performing firms (those already bankrupt and those about to go bankrupt), we expect that outside succession will be more likely to occur than in general (Schwartz & Menon, 1985).…”