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The impact of CEO turnover on firm performance around interim successions

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  • Vincent Intintoli
  • Andrew Zhang
  • Wallace Davidson

Abstract

Prior research reports that financial performance of firms that hire interim CEO successors is worse following interim CEO appointments than those that hire permanent successors. We find that this underperformance occurs only following voluntary turnover interim appointments, which represent a small fraction of all voluntary turnovers and roughly a quarter of all interim appointments. We do not observe poor performance when boards hire interim successors following instances of forced departure. Further analysis shows that poor performance during voluntary turnover interim successions are limited to using operating performance measures; market performance is not significantly worse following interim successions. Our results indicate that many interim appointments should not be viewed as value decreasing endeavors and future research on post-succession financial performance should consider the circumstances surrounding the turnover of the predecessor. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Vincent Intintoli & Andrew Zhang & Wallace Davidson, 2014. "The impact of CEO turnover on firm performance around interim successions," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(2), pages 541-587, May.
    • Handle: RePEc:kap:jmgtgv:v:18:y:2014:i:2:p:541-587
    DOI: 10.1007/s10997-012-9253-2
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    References listed on IDEAS

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    Cited by:

    1. He, Xiaoxiao & Zhu, Margaret Rui, 2020. "Are interim CEOs just caretakers?," Journal of Corporate Finance, Elsevier, vol. 61(C).
    2. Zongyi Yin & Jiamei Ye & Xiaoying Wang & Fang Su, 2023. "Relationship between Corporate CEO Succession Planning and Corporate Performance," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 25(64), pages 885-885, August.
    3. 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.

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