Leaving on a High or Low Note? An Achievement Goal Perspective on Executive Retirement

Executive retirement represents a pivotal career transition with significant implications. However, our understanding of the antecedents of executive retirement remains limited. We contend that, different from the retirement of general employees, it is important to position executive retirement within an achievement context and consider factors such as firm performance and achievement goal orientations. Drawing on late adulthood developmental psychology, we propose an achievement goal framework to theorize the relationship between firm performance and executive retirement, and the moderating roles of goal orientations. We theorize that firm performance is associated with two distinct mechanisms: the legacy fulfillment mechanism (salient for executives with high performance) and the selective prioritization mechanism (salient for executives with low performance), which together result in a U‐shaped relationship between firm performance and the likelihood of executive retirement. We further consider executives’ goal orientations as boundary conditions to probe the underlying mechanisms. We found general support for our theory using an archival dataset of 1840 chief executive officers from S&P 1500 firms (Study 1) and a two‐wave survey of 363 executives (Study 2). By integrating developmental psychology theories into the executive retirement literature, our research sheds light on executive retirement decisions through a developmental psychology lens.