The harder they fall? What happens to CEOs who are fired: A new look at the area of CEO departure in non-voluntary succession events

Andrew John Ward, University of Pennsylvania


While much has been written on the subject of CEO succession, most of this research has focused either on the determinants of exit, or the effects that exit has on the organization. The consequences for CEO who departs the organization has been a largely neglected part of the succession story. This dissertation addresses three questions relating to the consequences for the CEO. First, it explores what causes the CEO to be forced out of office. Using a sample of 70 events in Business Week 1000 firms from 1988-1992 matched with a control group where no exit or only a routine retirement occurred, the linkage between performance, power and exit was examined. A negative relationship was found between forced exit and profitability, debt-downgrading and abnormal stock returns. CEO power was negatively associated with forced exit regardless of performance. However, only an interaction effect was also found between director power or institutional ownership and forced exit. So the power of directors and investors only influences forced exit when considering poorly performing firms. The second question addressed is what effect does the ouster have on career outcomes for the ousted CEO. This section develops a typology of exit reasons and examines the impact that exit reason and other individual and situational variables have on the subsequent career trajectory. Reason for exit had a significant impact on reentry with some exits having a more negative impact on the CEO's career prospects than others. Age had a dual impact. While younger exited CEOs were more sought after for active executive roles, older ousted CEOs were more sought after than their younger counterparts for advisory roles such as board memberships. No relationship was found between reentry and prior compensation, media coverage or the number of boards on which the CEO served. The third part of the dissertation takes a more qualitative look at CEOs who have been through an exit under duress, and, through extensive interviews with ousted CEOs, uses their experiences, combined with established theory from the social sciences to build a theoretical model of the stress caused by exit and recovery process.

Subject Area

Management|Occupational psychology

Recommended Citation

Ward, Andrew John, "The harder they fall? What happens to CEOs who are fired: A new look at the area of CEO departure in non-voluntary succession events" (1996). Dissertations available from ProQuest. AAI9628023.