Activist Involvement in CEO Recruiting

51 Pages Posted: 4 Mar 2020 Last revised: 28 Jul 2020

Date Written: February 7, 2020


Using hand-collected data on CEO appointments during hedge fund activism campaigns, this study examines whether shareholder involvement in CEO recruiting is followed by better CEO hiring decisions. The results indicate that appointments of CEOs who are recruited with activist influence trigger more favorable stock market reactions and lead to stronger profitability improvements compared with several CEO appointment control samples. Analyses of the channels suggest that activists influence CEO selection when recruiting frictions are more severe, ensure that more resources are dedicated to the CEO search process, and facilitate the hiring of more experienced CEOs from outside the firm. These findings contribute to the literature on CEO turnover, which tends to focus on the decision to remove incumbent CEOs but provides limited insights into CEO recruiting.

Keywords: CEO recruiting, CEO turnover, shareholder activism, corporate governance, hedge fund activism

JEL Classification: G23, G32, G34, M12, M51

Suggested Citation

Keusch, Thomas, Activist Involvement in CEO Recruiting (February 7, 2020). Available at SSRN: or

Thomas Keusch (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex

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