Seven Myths of CEO Succession

David F. Larcker, Stephen A. Miles, and Brian Tayan

The chief executive officer of a company is responsible for a long list of decisions that impact corporate performance, including strategy, organizational design, and incentives. He or she also brings to bear a managerial and leadership style that has a considerable influence on workplace productivity and culture. As such, many believe that the selection of the CEO is the single most important decision that a board of directors can make. In recent years, several high profile transitions at major corporations such as Procter & Gamble, Microsoft and JC Penney have cast a spotlight on succession and called into question the reliability of the process that companies use to identify and develop future leaders. We examine seven common misconceptions relating to CEO succession.

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