Experience Matters? The Impact of Prior CEO Experience on Firm Performance

We sample CEOs of the 2005?S&P 500 corporations to look at the relationship between experience in the CEO position of a different firm and the post-succession financial performance of the firm that they currently lead. We find that experience in the CEO position is negatively related to firm performance. CEOs who directly move to their current CEO position from the previous one and those with job-specific experience in the same or related industry or at the helm of a previous company similar in size to the current one are associated with significantly lower post-succession performance than those without prior CEO experience. The results contribute to the literatures on CEO succession, the performance effect of job-specific experience, and the transferability of human capital.