When Leaders Leave, Do Markets Shake? The Stabilizing Power of Succession Planning
Year: 2025
Type: article
Abstract: Succession planning is lauded in business media as a key mechanism for promoting organizational continuity and mitigating disruption during CEO turnovers. To evaluate these claims, I develop a new text-based measure of succession plan quality. Among the S&P 1500 firms, firms with higher-quality succession plans tend to experience less valuation loss and reduced stock price volatility during retirement events. Furthermore, these benefits appear to exhibit threshold effects, manifesting only among firms with the highest grades of succession plan quality. These results underscore the value of rigorous succession planning as a risk management tool and offer new empirical insights into how governance infrastructure affects market perceptions in periods of executive change.
Source: Stanford Digital Repository
DOI: 10.25740/yk575hx4368
Authors: Li, Tina, Bloom, Nicholas
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6908375469
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