The Time to Succeed: CEO Appointment Phase Entrainment and Post-Succession Firm Operational Performance

Abstract

Given the inevitability of CEO successions and the importance of CEOs to firm performance, a stream of research explores the effects of new CEO appointments on post-succession firm performance. Yet, scholarly findings regarding the performance outcomes provoked by CEO succession are decidedly mixed. We argue that a temporal explanation, particularly one focusing on the dates at which new CEOs are appointed to their positions (i.e., when they begin their tenures), may offer critical insight into this relationship. As such, to advance the CEO succession literature, we define CEO appointment phase entrainment as timing the start day of a newly appointed CEO to coincide with the beginning of well-known zeitgebers, and we offer arguments—leveraging organizational entrainment theory—suggesting that entraining CEO appointments to the start of the calendar or fiscal year zeitgebers results in heightened operational performance. Further, we argue that entraining such appointments to these zeitgebers will be more effective when the new CEO is an outsider, young, or an occupational minority. Across numerous analyses, we find empirical evidence consistent with our theory. We therefore make important theoretical contributions to the CEO succession and organization entrainment literatures.