CEO Turnovers and Disruptions in Customer-Supplier Relationships

Intintoli, Vincent; Serfling, Matthew; Shaikh, Sarah

doi:10.2139/ssrn.2178148

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CEO Turnovers and Disruptions in Customer-Supplier Relationships

Journal of Financial and Quantitative Analysis, Forthcoming

66 Pages Posted: 21 Nov 2012 Last revised: 17 Aug 2016

See all articles by Vincent Intintoli

Vincent Intintoli

Clemson University, Department of Finance

Matthew Serfling

University of Tennessee; European Corporate Governance Institute (ECGI)

Sarah Shaikh

University of Washington - Department of Accounting; University of Washington - Department of Accounting; University of Washington - Department of Accounting

Date Written: August 16, 2016

Abstract

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