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The appointment of outside CEOs has become increasingly common, with about a third of new CEOs originating from outside the firm. Yet many studies on CEO appointments report that outside CEOs underperform compared to inside CEOs and exhibit higher performance variance. The new paper accepted for publication in the Academy of Management Journal by Professor Keil, with Professor Dovev Lavie (Bocconi University) and Assistant Professor Stevo Pavicevic (Frankfurt School of Finance and Management) examines what drives the performance implications of new CEO appointments and their variance. The paper extends CEO-centric explanations drawing on the importance of CEO executive experience and fit of the CEOs background with the hiring corporation and develops a novel stakeholder-centric theoretical perspective arguing that stakeholders’ negative sentiment toward the CEO appointment undermines post-succession performance.
