Ownership Matters: How Family Control Affects the Value of Board Chair Types After CEO Successions

Abstract

This study examines the performance consequences of Chief Executive Officer (CEO) successions, focusing on the types of board chairs and firm ownership structures. While CEO successions can bring adaptation benefits and performance gains through strategic realignment, they can also cause disruption costs and performance losses by disturbing stakeholder relationships. We examine how the presence of a predecessor CEO or an independent individual as board chair affects postsuccession performance differently depending on the level of family control. Our analysis of a panel dataset of S&P 1500 firms from 2003 to 2022 and a series of robustness tests provide strong support for our predictions. We found that with increasing family control, predecessor CEOs as board chairs have a more positive effect on postsuccession performance, while the opposite holds true for independent board chairs. Further, within family-controlled firms, the effect of predecessor retention is stronger for outside than inside CEO successions. Our findings expand CEO succession and board chair research by demonstrating that the value of a board chair type after a CEO succession depends on a firm’s ownership structure, particularly the degree of family control.