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

Research output: Contribution to journalJournal articleResearchpeer-review


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.
Original languageEnglish
Article number102050
JournalLong Range Planning
Number of pages16
Publication statusPublished - 3 Nov 2020

Bibliographical note

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


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

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