Literature Review on CEO Succession Types and Follow-up effects

Since it was first discussed by Weisbach M.S. in “Outside directors and CEO turnover” (1988), the matter of CEO Succession has received increased attention and thorough theorization in the last few decades. This has led to the creation and adoption of different methods of research in the field leading to conflicting results throughout the years. This paper aims to summarize and review the most recent theories, taking note of the most cited literature through the years, describing its evolution, and identifying gaps in the research on the topic through the coding of keywords and key concepts, of all the relevant documents. By analyzing a qualitative empirical method (content analysis) of research used in literature, the study tried to find a common ground that can be utilized as the base for future studies. The results show an additional CEO succession category: the double-outsider, described as a candidate outside of both the company and the industry. Another important finding is the clarification of the process that can lead to a succession, found by Berns (2017): (1) Relay succession; (2) Horse race; (3) Interim; (4) Insider follower and (5) Insider contender. The literature research on CEO succession identifies some lacks of cohesion when deciding on what parameter using in order to measure the firm performance. Results suggest free cash flow parameter can be used to achieve a holistic view of internal performance. Furthermore, future research should focus on the effect that the CEO has on the company to isolate his/her contribution to the company's the company's performance in order to understand and estimate her/his contribution. This paper goes beyond the CEO succession concept as a moment in the lifetime’ firm, identifying the CEO succession as a process characterized by three phases.