Shareholders pay considerable attention to the choice of executive selected as the new CEO whenever a change in leadership takes place. However, without an inside look at the leading candidates to assume the CEO role, it is difficult for shareholders to tell whether the board has made the correct choice. In this Closer Look, we examine CEO succession events among the largest 100 companies over a ten-year period to determine what happens to the executives who were not selected (i.e., the “succession losers”) and how they perform relative to those who were selected (the “succession winners”).
- Are the executives selected for the CEO role really better than those passed over?
- What are the implications for understanding the labor market for executive talent?
- Are differences in performance due to operating conditions or quality of available talent?
- Are boards better at identifying CEO talent than other research generally suggests?