Intergroup Bias and New CEO Turnover

We develop a theory of intergroup bias to predict that difference between a new CEO and incumbent directors in gender and race increases the likelihood of new CEO turnover. Moreover, because prior direct contact helps reduce intergroup bias based on demographic difference, we propose that a new CEO’s organizational origin, prior board ties and prior social ties with incumbent directors moderate the positive impact of difference in gender and race on new CEO turnover. Using data on 394 CEOs appointed between 1994 and 2004, we find empirical support for the above theoretical predictions. This study advances a new social psychological perspective on the causes of new CEO turnover. It also has important implications for research on corporate governance and social discrimination in the corporate elite.