CEO Turnovers and Disruptions in Customer-Supplier Relationships
Matthew A. Serfling
University of Arizona - Department of Finance
University of Arizona - Department of Accounting
January 28, 2015
Events that disrupt customer-supplier relationships pose a source of risk for suppliers that depend on a customer for a large portion of their revenues. We identify the replacement of a customer’s CEO as a disruptive event that results in suppliers losing substantial sales to the customer following the turnover. This loss is greater when incumbents are more likely to be entrenched. Suppliers also experience declines in overall financial performance following this loss in sales as well as negative abnormal stock returns to announcements of customer CEO departures. Our findings suggest that these disruptions largely stem from successors divesting assets.
Number of Pages in PDF File: 63
Keywords: Suppliers, Customers, CEO Turnover, Relationship-Specific Investments
JEL Classification: G30, G34
Date posted: November 21, 2012 ; Last revised: February 3, 2015
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