58% of the corporations undergoing CEO turnover were under performing their peers for one year prior to the turnover event, indicating that poor corporate performance was a major driver of CEO turnover. However, on further analysis, dissecting the data by corporation size yielded differing results, with 75% of small corporations undergoing CEO turnover in the ambit of under-performance, whereas in respect of large corporations, most CEO turnover was conducted in the circumstance of out-performance.
Overall, CEO turnover yielded a statistically relevant improvement of 13.6% in post event corporate performance. However, if a corporation was significantly underperforming its peers prior to the turnover event, the new CEO was likely to improve corporate results by 96%, whereas, if a new CEO took over a significantly out-performing corporation, the post turnover corporate performance would reduce by 66%. A statistically relevant linear equation was formulated, predicting the level of post event corporate performance in relation to the pre event corporate performance.
The variables of CEO tenure, CEO age, internal versus external CEO placements, and company size were also investigated, yielding interesting observations.
A research proposal submitted by James Wilkes
Student no.: 13418026
10 November 2014