Journal of Financial and Quantitative Analysis, Forthcoming
66 Pages Posted: 21 Nov 2012 Last revised: 17 Aug 2016
Date Written: August 16, 2016
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.
Keywords: Suppliers, Customers, CEO Turnover, Relationship-Specific Investments
JEL Classification: G30, G34
Suggested Citation: Suggested Citation
Intintoli, Vincent and Serfling, Matthew and Shaikh, Sarah, CEO Turnovers and Disruptions in Customer-Supplier Relationships (August 16, 2016). Journal of Financial and Quantitative Analysis, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2178148 or http://dx.doi.org/10.2139/ssrn.2178148