Why CEOs Fall: The Causes and Consequences of Turnover at the Top

Despite the many well-researched articles about individual chief executive officers, there have been no systematic studies of the impact on CEOs’ careers of the tectonic shifts in global business, such as rising shareholder activism and changing corporate governance. Although the performance of chief executives has been the subject of extensive research, much of that research has focused on performance relative to compensation. Little if anything is available that charts relationships among CEO tenure, CEO demographics, and corporate performance. And nothing compares trends in these areas across geographies or industries.

To bridge this critical knowledge gap, Booz Allen Hamilton recently concluded what we believe to be the most comprehensive study ever done of the careers of global chief executive officers. For the 2,500 publicly traded corporations with the largest market capitalizations in the world on January 1, 2001, we identified all the chief executives who completed their stewardship during 2001 – the departing class of 2001. We analyzed these executives’ entire tenures as CEOs, including not only personal demographic data, such as age at ascension and departure, but also the financial performance of their companies, measured by net income growth and total returns to shareholders. To provide historical context, we also identified and analyzed the departing CEO classes of 1995, 1998, and 2000, focusing on the 2,500 largest companies in each given year.

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