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Market-Based Solutions to Vital Economic Issues
Research
Aug 1, 2019

Boomerang CEOs: What Happens When the CEO Comes Back?

Abstract

CEO successions represent critical junctures for firms. Although extant research explores the performance consequences resulting from different succession types, what remains underexplored is what happens when the firm rehires a former CEO (e.g., a “boomerang CEO”). Using a sample of over 6,000 CEO tenures, we examine the performance consequences of former CEOs who return to the firm. Our results suggest that these boomerang CEOs perform significantly worse than other CEOs, and that this effect is especially strong for firms in dynamic industries and when the boomerang CEO is a founder. Thus, the irony is that rehired CEOs may drag organizations backward instead of pushing them forward. Collectively, our findings contribute to the upper echelons and experience literatures.


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