Lead you? Let me think! A status based perspective on CEO replacement following financial restatement

Publication Type

Conference Paper

Publication Date

3-2019

Abstract

Firms seek to repair the financial andreputational damage due to misrepresentation by replacing their CEO, which isfavorably received by the stakeholders. However,this assumes that those firms tainted due to misrepresentation that have an intention to replace their CEO also havethe ability to do so – an assumptionnot empirically examined. We address this paucity by examining how the relativestanding of the tainted firm and its leaders affect its ability to recruit asuccessor CEO. Using matched sample, we find that while high-status of thetainted firm increases the likelihood that a high-status successor CEO isrecruited, high-status of the outgoing CEO reduces that likelihood, and boardstatus does not have any effect on successor CEO recruitment. Our resultshighlight a key challenge firms face because while stakeholders expect taintedfirms to replace their CEOs, doing so may make it more challenging to recruithigher status successor CEOs probably better positioned to repair the damagedfirm reputation.

Keywords

Financial restatement, CEO replacement, Upper echelons theory, Status

Discipline

Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Strategic Management Society Special Conference, Las Vegas, US, 2019 March 28-30

Publisher

Chinese University Press

City or Country

Las Vegas, NV

This document is currently not available here.

Share

COinS