Ceo role under the spotlightDecember 2013
Companies are more likely to hire prior ceos because they are increasingly unwilling to take the risk of hiring executives with no previous job-specific experience. But according to a new study by Burak Koyuncu of NEOMA Business School and Monika Hamori of IE Business School, prior ceos performed worse than their peers without such experience.
In their paper “Experience matters? The Impact of Prior CEO Experience on Firm Performance”, Koyuncu and Hamori collected data on the career histories of the ceos of S&P 500 corporations who occupied the ceo post from 2005.
Tracking their performances for up to three years after their appointment, the researchers found that 19.6% had at least one prior ceo job and that those who transitioned directly from a prior to a new ceo job showed 48% lower three-year average post-succession returns on assets. In contrast, ceos who spent time working in a different position between ceo jobs showed no significant difference in performance than ceos without prior experience.
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