The impact of executive job demands on dismissals of newly appointed CEOs

Yu Kai M. Wang, Kun M. Yang

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Why are some newly appointed CEOs dismissed from their positions while others are not? Is it hard for newly appointed CEOs to survive in highly diversified firms? Drawing upon the concepts of executive job demands and information-processing theory, we argue that newly appointed CEOs face entirely different degrees of complexity and challenges in their role, and that firms' product diversification and international diversification predict dismissals of newly appointed CEOs after controlling for other possible explanatory variables. Additionally, we propose that appointment of a new outsider CEO makes newly appointed CEOs more vulnerable to dismissal and consequently strengthens the predicted relationships. The empirical results support our arguments. These results suggest that the demands faced by a high degree of (product or international) diversification are likely to present challenges that increase the likelihood of corporate disruption through the departures of newly appointed CEOs. Contributions to the CEO dismissal and succession literature are discussed.

Original languageEnglish
Pages (from-to)705-724
Number of pages20
JournalJournal of Management and Organization
Volume21
Issue number6
DOIs
StatePublished - Feb 9 2015

Keywords

  • dismissal of newly appointed CEO
  • executive job demands
  • international diversification
  • product diversification

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