45 Pages Posted: 9 Mar 2007
Date Written: February 2007
We study the determinants and valuation consequences of rehiring a former CEO. Rehiring is more likely after poor performance of the current CEO, if the former CEO performed well during his prior tenure and maintains strong connections to the firm, and the more intangible are the firm's assets. While the market reacts negatively to the rehiring announcement, the accounting and stock market performances of rehired CEO firms do not differ from those of a control sample over the two years following the turnover. Our evidence suggests that firms rehiring their former CEOs hire the best available candidate given the circumstances.
Keywords: CEO turnover, boomerang CEO, managerial effects, entrenchment
JEL Classification: G14, G34
Suggested Citation: Suggested Citation
Fahlenbrach, Rüdiger and Minton, Bernadette A. and Pan, Carrie H., The Market for Comeback CEOs (February 2007). AFA 2008 New Orleans Meetings Paper. Available at SSRN: https://ssrn.com/abstract=968670 or http://dx.doi.org/10.2139/ssrn.968670