We sample CEOs of the 2005 S&P 500 corporations to look at the relationship between experience in the CEO position of a different fi rm and the postsuccession fi nancial performance of the fi rm that they currently lead. We fi nd that experience in the CEO position is negatively related to fi rm performance. CEOs who directly move to their current CEO position from the previous one and those with job-specifi c experience in the same or related industry or at the helm of a previous company similar in size to the current one are associated with signifi cantly lower post-succession performance than those without prior CEO experience. The results contribute to the literatures on CEO succession, the performance effect of job-specifi c experience, and the transferability of human capital.
International audienceWith this study, we update research by Ocasio and Kim (1999) by testing whether the trends that favored the prevalence of CEOs with an operations background in the 1980s and early 1990s continued between 1992 and 2005. Given that supply chain management became a top business priority during this period, we expect a greater prevalence of CEOs with an operations background. This is because, traditionally, executives belonging to the operations function have assumed responsibility for supply chain management issues. Our results, based on a sample of 437 CEOs who lead large-sized U.S. firms in eight industries, provide partial support for the hypothesis that CEOs with a functional background in operations attain higher post-succession performance than CEOs with other functional backgrounds. In addition, we find that the likelihood that newly appointed CEOs have a background in operations is greater in succession events that have taken place more recently and in situations that occurred in the face of poor firm financial performance
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