| dc.description.abstract | This thesis exams CEO turnover and whether the initial market reaction upon announcement of CEO turnover is indicative of the incumbent's first year of performance, particularly in cases in which a CEO was released due to poor firm performance and falling stock prices. Additionally, it is explores whether there is a difference in reaction and subsequent performance based on the origin of the incumbent CEO. To answer these questions, I set out to evaluate past research on topics such as causes of turnover, market reaction to turnover, advantages and disadvantages of internal hires versus external hires, and the overall effect that turnover has on firm performance, as well as research on the effectiveness by which leadership is able to influence performance within large firms. To supplement prior literature regarding these topics, a sample was taken of fourteen cases of CEO turnover, seven internal and seven external, and measured the initial market reaction and short-term effect of the turnover on key performance indicators such as stock price and ROE. The findings, coupled with prior research, suggest that though the market will react favorably to the announcement of turnover, the new CEOs short-term performance will closely reflect the performance of his/her predecessor. | |
