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Management article
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Reference no. F1201C
Authors: James M Citrin
Published by: Harvard Business Publishing
Published in: "Harvard Business Review - Forethought", 2012

Abstract

A new study finds no correlation between how a company's stock fares upon the announcement of a new CEO and the share price over that CEO's tenure. In fact, under certain circumstances, CEOs whose appointments cause their company's stock to drop tend to achieve better results over time than CEOs whose appointments cause the stock to rise. Directors looking to choose a new CEO should think about other criteria, such as the company's recent performance and whether candidates are insiders or outsiders.

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Abstract

A new study finds no correlation between how a company's stock fares upon the announcement of a new CEO and the share price over that CEO's tenure. In fact, under certain circumstances, CEOs whose appointments cause their company's stock to drop tend to achieve better results over time than CEOs whose appointments cause the stock to rise. Directors looking to choose a new CEO should think about other criteria, such as the company's recent performance and whether candidates are insiders or outsiders.

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