Title page for ETD etd-08192005-152601


Type of Document Dissertation
Author Altintig, Zeynep Ayca
Author's Email Address zaltin1@lsu.edu
URN etd-08192005-152601
Title CEO Succession Processes and Agency Costs
Degree Doctor of Philosophy (Ph.D.)
Department Finance (Business Administration)
Advisory Committee
Advisor Name Title
Harley E. Ryan Committee Co-Chair
Shane A. Johnson Committee Co-Chair
Sudipta Sarangi Committee Member
William R. Lane Committee Member
Suzanne Marchand Dean's Representative
Keywords
  • agency costs
  • corporate governance
  • ceo succession
  • passing the baton
Date of Defense 2005-07-15
Availability unrestricted
Abstract
In the 'passing the baton' succession process, the incumbent CEO/Chairman relinquishes the CEO title, but retains the Chairman title to facilitate monitoring the new CEO during a probationary period. The new CEO eventually wins the Chairman title if he is successful during the probationary period. We argue that this type of succession process can lead to managerial conformism and conservatism because reputation concerns give the retiring CEO incentives to pressure the new CEO to continue existing policies and to avoid making major changes that could substantially improve performance or increase firm value. Consistent with this hypothesis, we find no changes in operating performance, abnormal stock returns, or the number of policy decisions the new CEO makes during his probationary period, but significant increases in all of these measures after the probationary period ends. Managerial entrenchment exacerbates succession-securing behavior during the probationary period, while effective monitoring and control mitigate it.
Files
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