Changes at the Top: The Consequences of Executive Turnover and Succession

Sydney Finkelstein, Donald C. Hambrick and Albert A. Cannella

in Strategic Leadership

Published in print October 2008 | ISBN: 9780195162073
Published online January 2009 | e-ISBN: 9780199867332 | DOI:

Series: Strategic Management Series

 Changes at the Top: The Consequences of Executive Turnover and Succession

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This chapter discusses how CEO and top management team succession can affect a number of important organizational outcomes. The first section is organized around the broad kinds of changes that a succession might engender, how the process of succession can impact the new leader's early survival prospects, and the going-in mandate of new leaders. The second section focuses on the overall performance implications of leader succession, a topic that has garnered a great deal of research over the years. The notions of scapegoating and insider versus outsider succession are examined. The chapter then discusses contextual factors such as the stage of organizational life cycle, organization-level changes that accompany the succession event, and institutional factors (such as discontinuous change). It then reviews the literature on shareholder reactions to succession. In the next section, the discussion expands beyond the CEO level to consider both the TMT and some specific positions below the CEO level (e.g., the CFO). In the final section, a variety of issues related to succession are discussed, including temporary succession, SBU leader changes, and post-succession “settling up” among organizational leaders.

Keywords: CEO succession; outcomes of succession; shareholder reactions; scapegoating; insider versus outsider; non-CEO leader succession

Chapter.  12998 words.  Illustrated.

Subjects: Business Strategy

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