Key Executive Succession and Stockholder Wealth: The Influence of Successorys Origin, Position, and Age

Abstract

This study uses event time methodology to test the reaction of the stock market to announcements of the appointments of 367 key executive officers in a sample of 1986 Fortune 500 companies. We found significant, positive market reactions for the total top management sample. In addition, we found differences for successor's origin, position, and age at the time of appointment. The results highlight the importance of specifying the conditions under which succession will have its different effects.