Excerpt from the article:
A new study shows that two key factors can make freshly appointed CEOs more vulnerable and raise the odds they’ll get fired.
The job security of a new CEO tends to suffer when the stock market reacts badly or when the previous CEO stays on as board chair, according to the study by Rice University and Peking University management experts. But the study found that the new CEO can overcome these challenges with what researchers call “social influence behaviors.”
The study’s authors used computer programs to analyze transcripts of new CEOs’ conference calls with securities analysts. They found that CEOs who ingratiated themselves with their predecessors reduced the adverse impact of the old boss remaining as board chair. At the same time, the study concluded CEOs who engaged in self-promotion mitigated the negative impact of poor stock market reactions.
But the authors also found evidence that new CEOs’ social influence behaviors can backfire. “A new CEO’s commitment to strategic continuity — as originated by the predecessor CEO — can amplify the adverse impact of the initial negative stock market reaction,” the authors said. “Moreover, a new CEO’s self-centered expression may turn off the retained predecessor CEO, thus amplifying the adverse impact of the predecessor’s staying on as board chair on the new CEO’s early survival prospect.”