Fresh in the Saddle: The Influence of a New CEO's Vision and Origin, and CEO Succession Type on Market Actors' Reactions

Nikolaos Kavadis, Mariano L. M. Heyden, Jatinder S. Sidhu

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Abstrakt

CEO succession is a critical event in the life of a company. How external stakeholders respond to it, can affect the company's valuation. This study investigates how securities analysts' and investors' reactions to CEO succession are affected by the interplay between the charisma of the new CEO's vision, the new CEO's origin (whether an insider or outsider), and the type of CEO succession (whether routine, dismissal or interim). Drawing on the literature on signaling, we suggest that because a charismatic vision emits a positive signal about the company's future performance, it will affect market actors' reactions by either weakening or strengthening the influence of the signals emitted by other succession context contingencies, namely, CEO origin and succession type. To test our predictions regarding analysts' and investors' reactions, we respectively analyze panel data and conduct an event study. The results support most of our predictions. We discuss the study's contributions and implications.
OriginalsprogEngelsk
Artikelnummer102050
TidsskriftLong Range Planning
Antal sider16
ISSN0024-6301
DOI
StatusUdgivet - 3 nov. 2020

Bibliografisk note

Epub ahead of print. Published online: 3. November 2020

Emneord

  • CEO succesion
  • CEO origin
  • Charismatic vision
  • Market performance
  • Signaling theory

Citationsformater