IMPLICATIONS OF INSIDER AND OUTSIDER CEOs ON FIRM PERFORMANCE: EVIDENCE FROM CEO SUCCESSIONS FROM TURKEY

This study investigates the performance consequences of Chief Executive Officer (CEO) succession in an emerging market as prior research suggests that the differences in the performance implications of CEO successor's origin may be related to the distinctive contexts offered by these economies. Hence, we investigated the impact of a new CEO origin on firm profitability in Turkey for the years 2010 and 2011. The results showed that there is a positive association between outsider successors and post-succession profitability in listed companies in Turkey. Further, the effects of unrelated and related outside succession on post-succession firm performance differ. While the related outsiders affect negatively the firm performance, unrelated outsiders contribute positively to the post-succession profitability (ROA). These findings thus contribute to the existing CEO succession literature by emphasizing the value of outsider CEOs' fresh perspectives, new and diverse skills and initiative for change.