CEO Succession and Competitive Attacks from Rivals

With likely disruptions in a focal firm’s ongoing routines and processes, a CEO succession event may be an opportune time for rivals to engage in competitive attacks against the focal firm, particularly when the successor CEO is very different from the predecessor in professional experiences. We argue that the effect of predecessor-successor experience differential on rivals’ competitive attacks is contingent upon whether the focal firm has a strong corporate governance stabilizing force such as a high presence of dedicated ownership or by keeping the predecessor on the board. Using archival data on CEO succession events of S&P 500 firms between the years 2010 and 2017, we find support for our propositions that strong corporate governance may ward off rivals’ competitive attacks when a focal firm is hiring a new CEO that is drastically different from the predecessor.