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The impact of executive job demands on dismissals of newly appointed CEOs

Published online by Cambridge University Press:  10 February 2015

Yu-Kai M Wang  and
Kun M Yang
Yu-Kai M Wang*
Affiliation:
Department of Business Administration, Soochow University, Taipei, Taiwan, ROC College of Business Administration, Central Michigan University, Mt Pleasant, MI, USA
Kun M Yang
Affiliation:
College of Business Administration, Central Michigan University, Mt Pleasant, MI, USA
*
Corresponding author: [email protected]
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Abstract

Why are some newly appointed CEOs dismissed from their positions while others are not? Is it hard for newly appointed CEOs to survive in highly diversified firms? Drawing upon the concepts of executive job demands and information-processing theory, we argue that newly appointed CEOs face entirely different degrees of complexity and challenges in their role, and that firms’ product diversification and international diversification predict dismissals of newly appointed CEOs after controlling for other possible explanatory variables. Additionally, we propose that appointment of a new outsider CEO makes newly appointed CEOs more vulnerable to dismissal and consequently strengthens the predicted relationships. The empirical results support our arguments. These results suggest that the demands faced by a high degree of (product or international) diversification are likely to present challenges that increase the likelihood of corporate disruption through the departures of newly appointed CEOs. Contributions to the CEO dismissal and succession literature are discussed.

Keywords

executive job demandsdismissal of newly appointed CEOinternational diversificationproduct diversification
Type
Research Article
Information
Journal of Management & Organization , Volume 21 , Issue 6 , November 2015 , pp. 705 - 724
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2015 

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