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This article examines the effects of CEO successions on stockholder wealth in large firms that are also experiencing bankruptcy. Succession announcements that occurred prior to and subsequent to bankruptcy announcements are associated with positive abnormal returns, and we found a greater incidence of outside succession near bankruptcy than for successions in general. The market’s reaction was also more positive for outsiders than for insiders, and this was especially so when the succession happened after bankruptcy.
Davidson et al. (1993) studied this question.
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