CEO Selection, Turnover, and Succession Planning

In this chapter, we examine the process by which directors select, evaluate, and plan for the replacement of the chief executive officer (CEO). We start by evaluating the labor market for chief executive officers and explain the implication that the efficiency of this market has on selection and performance. Next, we provide an overview of the CEO population, including their backgrounds and attributes. Then, we explore the question of how responsive corporations are to replacing underperforming CEOs (that is, the sensitivity of CEO turnover to performance) and the research evidence on the relative performance of internal versus external replacements. We end with an evaluation of the various ...

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