Firing and Hiring the CEO: What Does CEO Turnover Data Tell Us About Succession Planning?

22 Pages Posted: 12 Apr 2022

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business; Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance

Brian Tayan

Stanford University - Graduate School of Business

Edward M. Watts

Yale School of Management

Date Written: April 7, 2022

Abstract

We examine CEO turnover and succession planning using a unique and highly comprehensive data set from the company exechange. Exechange applies a novel methodology that evaluates the circumstances surrounding a CEO departure to determine the degree to which the turnover event might be voluntary or involuntary (called the Push-Out Score). With this data, we are able to provide new statistics on CEO departures and fresh analysis in three areas of succession planning—sensitivity of turnover to performance, board preparedness to name a successor, and the performance of internal and external successors—to arrive at a more current assessment of the quality of CEO succession planning among publicly traded companies in the U.S.

Keywords: Corporate governance, CEO turnover, CEO terminations, succession planning, interim successors, permanent successors, internal, external, voluntary, involuntary, Push-Out Scores, disclosure, board oversight, board of directors, corporate governance research

Suggested Citation

Larcker, David F. and Tayan, Brian and Watts, Edward, Firing and Hiring the CEO: What Does CEO Turnover Data Tell Us About Succession Planning? (April 7, 2022). Rock Center for Corporate Governance at Stanford University Working Paper Forthcoming, Stanford University Graduate School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=4079127

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance ( email )

Crown Quadrangle 559 Nathan Ab
Stanford, CA 94305-8610
United States

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Edward Watts

Yale School of Management ( email )

165 Whitney Ave
New Haven, CT 06511

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