To get the best new CEO, must the old CEO go? Power distribution in external CEO successions
✍ Scribed by John T. Perry; Xin Yao; Gaylen N. Chandler
- Book ID
- 102501884
- Publisher
- John Wiley and Sons
- Year
- 2011
- Tongue
- English
- Weight
- 217 KB
- Volume
- 32
- Category
- Article
- ISSN
- 0143-6570
- DOI
- 10.1002/mde.1551
No coin nor oath required. For personal study only.
✦ Synopsis
When chief executive officers (CEOs) are replaced by external successors, they frequently retain high levels of power. We found that outgoing CEOs' announced post-succession involvement is negatively related to their successors' power. Additionally, we found that the magnitude of the stock market reaction to succession announcements is greater when the outgoing CEOs are allowed to continue to retain significant influence, and diminished when the new CEOs are awarded significant position power when they become CEO. These results suggest that to improve long-term performance, companies should keep outgoing CEOs around and not grant new CEOs too much power.