So Close and Yet So Far: Promotion Versus Exit for CEO Heirs Apparent

Abstract

“Heirs apparent” are frequently a central component of CEO successions but have been largely ignored in the succession literature. Our study examines heir apparent tenures and two contrasting outcomes—promotion to CEO and firm exit. We propose that the distribution of power among an incumbent CEO, outside directors, and an heir apparent influences these outcomes. Results suggest that outside director and CEO power are important influences on heir promotion and exit and that heirs who arise from within a firm are less likely to exit.