Outsider CEOs Aren’t Always Saviors

By Staff Report

Jul. 30, 2004

G lobally, insider CEOs leaving the company left a positive impact of three percentage points on shareholder returns in their wake. In contrast, when an outside-hire left the top slot, shareholder returns typically fell by half a percentage point as a result of his tenure.

The same trend holds true in North America, Europe and Japan.

Median Shareholder Returns of Insider vs. Outsider CEOs, by Region

  2003 Insiders 2003 Outsiders Over Six Years–Insiders Over Six Years–Outsiders
North America 2.7 percent 1.3 percent 1.4 percent -0.8 percent
Europe 1.6 -3.5 1.0 -3.5
Japan 4.9 -2.6 -1.4 0.7
Rest of World 1.4 14.1 2.2 13.2
Global 3.0 -0.5 0.7 -0.8

Source:CEO Succession 2003: The Perils of “Good” Governance by Chuck Lucier, Rob Schuyt and Junichi Handa; a Booz Allen Hamilton Group annual survey.

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