Does It Pay off to Change the CEO? Changes in Operating Performance: Preliminary Results

This study analysed operating performance associated with the CEO succession in companies listed on the Warsaw Stock Exchange. An event study based on accounting data was applied. Operating performance was calculated as median and mean ROA and EBITDA/TA ratios within 3 years after CEO appointments and compared to ratios’ results in the same period before the event. Abnormal operating performance for the entire sample was negative and statistically significant. After the event the operating performance did not improve following new CEO appointments or re-appointments. Obtained results indicate that CEO appointments decrease the value of the company. Companies performed better for re-appointments compared to new CEO appointments. However in case of new CEOs we observed small improvement within the first 2 years after the succession.