CEO Turnovers and Disruptions in Customer-Supplier Relationships
Southern Illinois University at Carbondale
Matthew A. Serfling
University of Arizona - Department of Finance
University of Arizona - Department of Accounting
February 12, 2014
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 on average $19.1 million in sales. The magnitude of this loss in sales is lower when customers face higher switching costs but greater following more disruptive turnovers and when suppliers make relationship-specific investments. Further, suppliers experience declines in overall financial performance following this loss in sales as well as negative abnormal stock returns to announcements of customer CEO departures.
Number of Pages in PDF File: 75
Keywords: Suppliers, Customers, CEO Turnover, Relationship-Specific Investments
JEL Classification: G30, G34working papers series
Date posted: November 21, 2012 ; Last revised: February 18, 2014
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