Seven Myths of CEO Succession

Larcker, David F.; Miles, Stephen A.; Tayan, Brian

doi:10.2139/ssrn.2411669

Cited by 14 publications

(18 citation statements)

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“…In recent times, approximately between 10 to 15 percent of the companies globally change their CEOs (Larcker, Miles & Tayan, 2014). Similar phenomenon is also observed in Nigeria as reported in a CEO success study conducted by Booz Company -a subsidiary of PricewaterhouseCoopers (PwC) in 2015.…”

Section: Introductionsupporting

confidence: 66%

Outsider vs insider: Does firm governance matter?

Abdullahi

Ishak

Sawandi

2018

BEH

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As CEO turnover occurs, the company may select an insider or outsider as a successor. This study attempts to ascertain whether firm performance, female directors, board religiosity and blockholder ownership influence the decision to appoint an internal or external candidate. Results from logistic regression analysis on 72 succession events over a five-year period (2011 to 2015) reveal that firms which are controlled by blockholders and those with females on their boards tend to select an outsider as the successor. Meanwhile, firms that have Muslims on their boards are more likely to select insiders as successors. This study implies that poor firm performance does not necessarily lead to outside CEO selection choice. On the overall, the findings indicate that blockholder ownership and gender diversity in the boardroom matter in the Nigerian corporate landscape.JEL Classifications: M41, M42, M48, G34, G38

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Section: Introductionsupporting

confidence: 66%

Outsider vs insider: Does firm governance matter?

Abdullahi

Ishak

Sawandi

2018

BEH

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“…here has been considerable research on the CEO turnover and succession process. However, there has been relatively little research on how boards actually select successors, despite the belief held by many that selecting the CEO is the most important decision that a board of directors makes (Larcker et al, 2014). Most prior research has focused on the choice of outside vs. inside successions (Finkelstein et al, 2009).…”

Section: Introductionmentioning

confidence: 99%

Successor CEO Functional And Educational Backgrounds: Influence Of Predecessor Characteristics And Performance Antecedents

Elsaid

Benson

Worrell

2016

JABR

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This study seeks to examine if boards consider CEO educational and functional background when choosing a new CEO. It also examines which factors determine whether the board of directors will seek an incoming CEO with a different educational and/or functional background from that of the current CEO. Using a sample of 832 successions between 1992 and 2009, we found that the outgoing CEO characteristics and the firm characteristics influence the selection of the incoming CEO functional backgrounds. We found an increase in the likelihood of firms hiring incoming CEOs with the same functional backgrounds as the outgoing CEOs. Incoming CEOs with functional backgrounds in engineering/manufacturing are more likely to be hired by research-oriented firms.Incoming CEOs with functional backgrounds in accounting/finance are more likely to be hired by poorly performing firms. We also find that firms are more likely to change the functional background of the successor relative to the predecessor when there has been poor prior performance and the firm has higher institutional investor ownership.

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“…Top management positions such as Chief Executive Officer (CEO), Managing Director (MD), and Chief Operating Officer (COO) are held by important individuals who are responsible to set the direction of firm's objectives, make strategic and operational decisions, and eventually influence firms' performance and sustainability (Amran, Md Yusof, Ishak & Aripin 2014;Larcker, Miles, & Tayan 2014;Ishak & Abdul Latif 2012;Donoher, Reed & Storrud-Barnes 2007). Therefore, it is understandably agreed that public, specifically investors, will react in certain ways when there are announcements of changes in the top management position since it indicates firms' future financial performance (Jalal & Prezas 2012), and their success or failure (Rhim, Peluchette & Song 2006).…”

Section: Introductionmentioning

confidence: 99%