Abstract
Our study examines investor reactions to a specific form of succession planning-relay succession. Theory predicts that both the initiation and the outcome of a relay CEO succession process will influence shareholder wealth. Our results show that investors generally do not react to the initiation of the process as indicated by heir apparent appointment; but react negatively when the process ends in heir apparent exit from the firm and react positively when the process ends in heir apparent promotion to the CEO position. We also found a strong positive investor reaction to outside CEO promotion and a negative investor reaction to nonheir inside CEO promotion. Further, firm performance exerts an important influence on the wealth effect of heir apparent promotion and exit.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 191-198 |
| Number of pages | 8 |
| Journal | Strategic Management Journal |
| Volume | 24 |
| Issue number | 2 |
| DOIs | |
| State | Published - Feb 2003 |
| Externally published | Yes |
Keywords
- CEO succession
- Event study
- Firm performance
- Shareholder wealth
- Succession planning
ASJC Scopus subject areas
- Business and International Management
- Strategy and Management