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The Value of an Heir Apparent in Succession Planning

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  • Bruce K. Behn
  • Richard A. Riley
  • Ya‐wen Yang

Abstract

This study examines whether the equity markets value firms that have a succession plan in place. We find that firms with an heir apparent already designated upon the death of the CEO have significantly higher cumulative abnormal returns on the date of death than firms that have not identified an heir apparent. This study contributes to the existing governance/succession planning literature by providing empirical evidence that succession planning appears to be valuable to companies engaged in succession transitions.

Suggested Citation

  • Bruce K. Behn & Richard A. Riley & Ya‐wen Yang, 2005. "The Value of an Heir Apparent in Succession Planning," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(2), pages 168-177, March.
    • Handle: RePEc:bla:corgov:v:13:y:2005:i:2:p:168-177
    DOI: 10.1111/j.1467-8683.2005.00415.x
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    Cited by:

    1. M. Martin Boyer & Hernán Ortiz‐Molina, 2008. "Career Concerns of Top Executives, Managerial Ownership and CEO Succession," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 178-193, May.
    2. Eahab Elsaid & Nancy D Ursel, 2012. "Age, CEO Succession, and Risk Taking," Accounting and Finance Research, Sciedu Press, vol. 1(2), pages 1-77, November.
    3. Islam, Md Ariful & Hossain, Shahadat & Singh, Harjinder & Sultana, Nigar, 2021. "Outsider CEOs and corporate debt," International Review of Financial Analysis, Elsevier, vol. 74(C).
    4. Zhou, Fuzhao, 2023. "Succession planning and firm innovation," Finance Research Letters, Elsevier, vol. 58(PA).
    5. Elsaid, Eahab & Davidson III, Wallace N., 2009. "What happens to CEO compensation following turnover and succession?," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 424-447, May.
    6. Hansin Bilgili & Joanna Tochman Campbell & Alan E. Ellstrand & Jonathan L. Johnson, 2017. "Riding off into the Sunset: Organizational Sensegiving, Shareholder Sensemaking, and Reactions to CEO Retirement," Journal of Management Studies, Wiley Blackwell, vol. 54(7), pages 1019-1049, November.

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