Age, CEO Succession, and Risk Taking

Abstract

CEO successions are major corporate events with the potential to change corporate direction. We investigate risk-taking following CEO succession and whether age affects CEO succession. In 679 CEO successions occurring between 1992 and 2005 in 650 small, medium and large-cap North American firms, we find that, except when the predecessor CEO was forced to leave, successor CEOs tend to entrench the status quo in terms of age. Board age has implications for corporate risk taking, with older boards being associated with less firm risk taking.