Determinants of CEO Age at Succession |
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| Authors: | Wallace N Davidson III Carol Nemec Dan L Worrell |
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| Institution: | (1) Finance Department – Mailcode 4626, Southern Illinois University, Carbondale, IL 62901, USA;(2) Business Department, Southern Oregon University, 1250 Siskiyou Blvd, Ashland, OR 97520, USA;(3) Dean, San Walton College of Business, University of Arkansas, Fayetteville, AR 72701, USA |
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| Abstract: | Based on Brickley’s (2003) call for research on the CEO/turnover relation, we examine determinants of CEO age at succession.
Utilizing the similarity–attraction paradigm, we propose that board members will select new CEOs that are similar to their
own age. We find a strong positive relation between successor CEO age and average board member age. Thus, the similarity–attraction
paradigm seems to play a role in board of director selection of CEO successors. However, we also propose that poor prior performance
may mitigate similarity–attraction. Our results are also consistent with this hypothesis because we find no relation between
successor CEO and board age following poor prior performance. Finally, the hiring of an age-similar CEO does not reduce the
companies’ subsequent financial performance and may even have a slightly positive impact on it. |
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