Internal vs. External Successions and Their Effect on Firm Performance

Authors: Lauterbach B.; Vu J.; Weisberg J.

Source: Human Relations, Volume 52, Number 12, 1 December 1999 , pp. 1485-1504(20)

Publisher: Springer

Abstract:

An examination of 165 top management successions in U.S. firms during 1989-91 reveals that external successions are more likely in small firms, in firms with poor economic performance, and in firms which offer the successor several top positions (for example, Chairman and CEO). This last finding illustrates that successor's interests and demands (such as organizational power) are also important in determining the final match between manager and firm. We also find that, on average, the postsuccession performance of external successors is superior to that of internal successors. This could indicate that the Board of Directors faces an agency problem, leading it to appoint too often from inside.

Keywords: CEO SUCCESSIONS; FIRM PERFORMANCE; AGENCY PROBLEMS

Language: English

Document Type: Regular paper

Publication date: 1999-12-01

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• In this Subject: Psychology ,  Social Science (General)
• By this author: Lauterbach B. ;  Vu J. ;  Weisberg J.

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