Will succession planning increase shareholder wealth? Evidence from investor reactions to relay CEO successions Academic Article uri icon


  • Our study examines investor reactions to a specific form of succession planning-relay succession. Theory predicts that both the initiation and the outcome of a relay CEO succession process will influence shareholder wealth. Our results show that investors generally do not react to the initiation of the process as indicated by heir apparent appointment; but react negatively when the process ends in heir apparent exit from the firm and react positively when the process ends in heir apparent promotion to the CEO position. We also found a strong positive investor reaction to outside CEO promotion and a negative investor reaction to nonheir inside CEO promotion. Further, firm performance exerts an important influence on the wealth effect of heir apparent promotion and exit. Copyright 2002 John Wiley & Sons, Ltd.

published proceedings


author list (cited authors)

  • Shen, W., & Cannella, A. A.

citation count

  • 133

complete list of authors

  • Shen, W||Cannella, AA

publication date

  • February 2003