The Impact of CEO Turnover On Competitors, Suppliers and Corporate Customers

Prior studies examining the wealth effects of a change in CEO or top management team have produced mixed results. In addition, researchers also have reported inconsistent findings with regard to whether CEO turnover improves or hurts or is irrelevant to organizational performance. In this study, we reexamine the stock price reactions of the announcing firms in the CEO turnover announcement period and further examine the impacts on the industry competitors, suppliers and corporate customers. Our sample consists of 1546 CEO turnover announcements during the period of 1987 to 2004. Following Shahrur (2005), we use the benchmark input-output accounts for the U.S. economy to identify the competitors, suppliers and corporate customers of the announcers. The result reveals that there is not only a positive effect on the share value of the announcers but also on their suppliers and customers in the announcement period.