Introduction

In this article we examine the relationship between a firm’s stock price, its CEO’s tenure and the reason behind any change in CEO. We follow along similiar lines of analysis to The CEO Life Cycle by Citrin, Hildebrand and Stark who examine CEO performance by tenure (as opposed to calendar) year. In addiiton, via a relatively new open data set on CEO departures, we investigate how the CEO lifecycle is effected by the nature of the predecessor’s departure.

The data

The data we shall beusing is an open data set compiled by; Richard J. Gentry, Joseph S. Harrison, Timothy J. Quigley, Steven Boivie. It aims to cover all CEO dismissals and departures in the S&P 1500 between 2000 and 2021. What is different about this dataset is that it contains qualitative reasons behind CEO departures. Prior research on CEO turnover either does not capture the cause of departure or has coded the event independently, leading to inconsistencies and a lack of transparency in coding schemes. This has made it difficult to generate knowledge on the causes and consequences of CEO dismissal. The dataset contains 9390 departures, from 2000 to 2021, of 8679 CEOs. The data contain eight departure classifications alongside more detailed description of those classifications. Here is the distribution of those classifications across CEO departures:


Reasons for departure

Count % Sample Reason Description
3668 48 Voluntary - CEO retired Voluntary retirement based on how the turnover was reported in the media. Here the departure did not sound forced, and the CEO often had a voice or comment in the succession announcement. Media coverage of voluntary turnover was more valedictory than critical. Firms use different mandatory retirement ages, so we could not use 65 or older and facing mandatory retirement as a cut off. We examined coverage around the event and subsequent coverage of the CEO's career when it sounded unclear.
2129 28 Other Interim CEOs, CEO departure following a merger or acquisition, company ceased to exist, company changed key identifiers so it is not an actual turnover, and CEO may or may not have taken over the new company.
1200 16 Involuntary - CEO dismissed for job performance The CEO stepped down for reasons related to job performance. This included situations where the CEO was immediately terminated as well as when the CEO was given some transition period, but the media coverage was negative. Often the media cited financial performance or some other failing of CEO job performance (e.g., leadership deficiencies, innovation weaknesses, etc.).
214 3 Involuntary - CEO dismissed for personal issues The CEO was terminated for behavioral or policy-related problems. The CEO's departure was almost always immediate, and the announcement cited an instance where the CEO violated company HR policy, expense account cheating, etc.
187 2 Voluntary - new opportunity (new career driven succession) The CEO left to pursue a new venture or to work at another company. This frequently occurred in startup firms and for founders.
96 1 Involuntary - CEO illness Required announcement that the CEO was leaving for health concerns rather than removed during a health crisis.
84 1 Involuntary - CEO death The CEO died while in office and did not have an opportunity to resign before health failed.
83 1 Execucomp error If a researcher were to create a dataset of all potential turnovers using execucomp (co_per_rol != l.co_per_rol), several instances will appear of what looks like a turnover when there was no actual event. This code captures those.
60 1 Missing Despite attempts to collect information, there was not sufficient data to assign a code to the turnover event. These will remain the subject of further investigation and expansion.


We can see that by far the most common reason is voluntary retirement. Many of these were probably not as volunatary as the CEO would’ve liked but we do know that they are not associated with a publicised reason for dismissal (third row in table above). The second most common reason is “other”, which according to the longer description above relates to M&A situations, caretaker CEOs or arcane database management.