Revisiting the Performance Consequences of CEO Succession: The Impacts of Successor Type, Postsuccession Senior Executive Turnover, and Departing CEO Tenure

Abstract

Highlighting the importance of succession context, this study examines the performance impacts of successor type, postsuccession senior executive turnover, and departing CEO tenure. Following a power circulation theory of control, we distinguished three types of CEO successors: followers, contenders, and outsiders. Our theory and evidence from a sample of 228 CEO successions suggest that successor type interacts with postsuccession senior executive turnover to influence firm return on assets (ROA) and that there is an inverted U-shaped relationship between departing CEO tenure and postsuccession firm ROA.