When the former CEO stays on as board chair: Effects on successor discretion, strategic change, and performance

Timothy J. Quigley, Donald C. Hambrick

Research output: Contribution to journalArticlepeer-review

170 Scopus citations

Abstract

Prior research on CEO succession has omitted consideration of a critical institutional reality: some exiting CEOs do not fully depart the scene but instead remain as board chairs. We posit that predecessor retention restricts a successor's discretion, thus dampening his or her ability to make strategic changes or deliver performance that deviates from pre-succession levels. In short, a predecessor's continuing presence suppresses a new CEO's influence. Based on analysis of 181 successions in high technology firms, and with extensive controls (for circumstances associated with succession, the firm's need and capacity for change, and for endogeneity), we find substantial support for our hypotheses. In supplementary analyses, we find that retention has a more pronounced effect in preventing a new CEO from making big performance gains than in preventing big drops.

Original languageEnglish (US)
Pages (from-to)834-859
Number of pages26
JournalStrategic Management Journal
Volume33
Issue number7
DOIs
StatePublished - Jul 2012

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Strategy and Management

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