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CEO Succession: A Help or Hindrance to Corporate Reputation?

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Abstract

While there are over 50 years of study on how CEO turnover influences corporate outcomes, there is a paucity of research on the impact of leadership changes on reputation. This study uses signaling theory to investigate the relationship between chief executive transitions and corporate reputation, as assessed by 2007 and 2008 Fortune ratings of 241 companies. On average, CEO successions improved reputations; however, companies with higher initial reputations were more likely to experience a decline in their subsequent reputations. These significant effects occurred over the short term and were not significant over the long term. The implications of these findings address how companies should manage CEO transition announcements and succession planning.

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Acknowledgements

We thank Jay Stuller for his astute editing and we also thank the anonymous CRR reviewers for their insights that enhanced this paper.

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Authors and Affiliations

  1. Department of Management, San Francisco State University, San Francisco, CA, USA

    Sylvia J Flatt & Jason Harris-Boundy

  2. Department of Business, Linfield College, McMinnville, OR, USA

    Sharon Wagner

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  1. Sylvia J Flatt
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  2. Jason Harris-Boundy
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  3. Sharon Wagner
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Flatt, S., Harris-Boundy, J. & Wagner, S. CEO Succession: A Help or Hindrance to Corporate Reputation?. Corp Reputation Rev 16, 206–219 (2013). https://doi.org/10.1057/crr.2013.12

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