Are Outsiders Handicapped in CEO Successions?
AbstractWe argue that outsiders are handicapped in CEO successions to strengthen the incentive that the contest to become CEO provides inside candidates. Handicapping implies that a firm is more likely to pick an insider for the CEO position where insiders are more comparable to each other and less comparable to outsiders, and where there are more inside candidates. Using a novel measure of the comparability of insiders based on firm organizational structure, we analyze over 1,000 CEO successions in large U.S. firms over the 1974-1995 period and find a variety of evidence consistent with these implications of handicapping.
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Bibliographic InfoPaper provided by North Carolina State University, Department of Economics in its series Working Paper Series with number 003.
Date of creation:
Date of revision: Apr 2004
Publication status: Forthcoming in Journal of Corporate Finance, 2004
Other versions of this item:
- NEP-BEC-2004-11-07 (Business Economics)
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