Publication Type

Journal Article

Version

publishedVersion

Publication Date

12-2014

Abstract

Although past studies have paid considerable attention to firms' reputations, few have investigated the actions that firms take following a reputation-damaging event. We identify firms involved in financial earnings restatements and examine whether naming a successor CEO with specific qualities serves to signal the seriousness of a firm's efforts to restore its reputation. Using theories of market signaling, we argue that attributes of successor CEOs significantly influence the reactions of key external constituencies. In particular, firms with more severe restatement tend to name successors who have prior CEO or turnaround experience and a more elite education. The naming of such successors results in more positive reactions from the stock market, financial analysts, and mass media. We argue that these attributes send messages to stakeholders and the broader public about the CEO's credibility and the firm's efforts.

Keywords

Organizational reputation, top management, certification contests, executive succession, automobile-industry, performance, market, media, consequences, legitimacy

Discipline

Corporate Finance | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

Volume

57

Issue

6

First Page

1759

Last Page

1785

ISSN

0001-4273

Identifier

10.5465/amj.2012.0491

Publisher

Academy of Management

Copyright Owner and License

Publisher

Additional URL

https://doi.org/10.5465/amj.2012.0491

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