IDEAS home Printed from https://ideas.repec.org/a/cup/jfinqa/v53y2018i03p1261-1295_00.html
   My bibliography  Save this article

Recruiting the CEO from the Board: Determinants and Consequences

Author

Listed:
  • Hoitash, Udi
  • Mkrtchyan, Anahit

Abstract

We investigate an increasingly prevalent CEO succession strategy: recruiting CEOs from the board of directors (director–CEOs). Director–CEOs might be hired in a planned succession because they combine outsiders’ new perspectives with insiders’ firm-specific knowledge. Alternatively, directors may be recruited when the board is unprepared for a leadership change. We find that unplanned successions, in which director–CEOs are appointed as a “quick-fix†solution, result in a negative market reaction, deterioration in performance, and ill-fitting candidates with shorter tenures. Conversely, firms recruiting director–CEOs in planned successions perform similarly to other firms. We find no evidence that poor firm quality drives these results.

Suggested Citation

  • Hoitash, Udi & Mkrtchyan, Anahit, 2018. "Recruiting the CEO from the Board: Determinants and Consequences," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 53(3), pages 1261-1295, June.
    • Handle: RePEc:cup:jfinqa:v:53:y:2018:i:03:p:1261-1295_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S002210901800011X/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Cziraki & Dirk Jenter, 2021. "The Market for CEOs," CESifo Working Paper Series 9143, CESifo.
    2. Steven Balsam & So Yean Kwack, 2022. "The impact of connections between the CEO and top executives on appointment, turnover and firm value," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 49(5-6), pages 882-933, May.
    3. Colak, Gonul & Gounopoulos, Dimitrios & Loukopoulos, Panagiotis & Loukopoulos, Georgios, 2021. "Tournament incentives and IPO failure risk," Journal of Banking & Finance, Elsevier, vol. 130(C).
    4. Hao, Ying & Huang, Lixin & Huang, Yuxiu & Wei, Zi, 2023. "Air quality and CEO cross–regional turnover ——The role of compensation or incentive," Pacific-Basin Finance Journal, Elsevier, vol. 80(C).
    5. Fei Wu & Jing Yu & Yujie Zhao & Donghua Zhou, 2022. "Interim CEO and corporate long‐term investment: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 369-415, March.
    6. (Jianqiu) Bai, John & Mkrtchyan, Anahit, 2023. "What do outside CEOs really do? Evidence from plant-level data," Journal of Financial Economics, Elsevier, vol. 147(1), pages 27-48.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jfinqa:v:53:y:2018:i:03:p:1261-1295_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/jfq .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.