What Lies Behind CEO Failure

Management literature has no clear answer to the question of what causes CEO dismissal. Articles published over the last 30 years in journals such as The Journal of Finance, Journal of Financial Economics, Academy of Management and Journal of Management come to opposite conclusions. The same explanatory variables have been worked through time and again: CEO origin (insider-outsider); director selection; CEO age and length of service; company type; industry type; mergers and acquisitions. Other popular themes include board size, proportion of independent directors and separation of CEO and chairman roles. None of these factors receives unanimous support from the literature. In each case, empirical studies vary in their assessment of the scale and nature of the effect. In this technical note we provide an overview of the explanations given by management scholars. A recent report published by Booz & Co. is used to assess these explanations.