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CEO succession planning and market reactions to CEO turnover announcements

Author

Listed:
  • Bae, Jihun
  • Joo, Jeong Hwan
  • Yu, Jaeyoon

Abstract

This study investigates how capital market investors assess CEO succession planning in the context of CEO turnover events. Conducting empirical tests using a manually collected sample of 676 CEO turnover cases, we find that CEO succession planning mitigates the negative association between CEO performance and market reactions to CEO turnover announcements. Further analyses reveal that our results are driven by firms with strong corporate governance. Overall, our findings suggest that CEO succession planning disclosure reduces investors’ concerns about firm performance in the event of CEO turnover.

Suggested Citation

  • Bae, Jihun & Joo, Jeong Hwan & Yu, Jaeyoon, 2023. "CEO succession planning and market reactions to CEO turnover announcements," Finance Research Letters, Elsevier, vol. 58(PA).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pa:s1544612323003185
    DOI: 10.1016/j.frl.2023.103946
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    References listed on IDEAS

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    1. Naveen, Lalitha, 2006. "Organizational Complexity and Succession Planning," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 41(3), pages 661-683, September.
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    Cited by:

    1. Zhou, Fuzhao, 2023. "Succession planning and firm innovation," Finance Research Letters, Elsevier, vol. 58(PA).

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    More about this item

    Keywords

    CEO turnover; CEO succession planning disclosure; Stock market reactions; Corporate governance;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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