Meet the new boss: CEO dismissal and the limits of leadership replacement in preventing corporate recidivism

Abstract

This study examines whether CEO dismissal following organisational misconduct reduces corporate recidivism, and whether this depends on the characteristics of the successor. Drawing on organisational behaviour research and strategic leadership literature, it is argued that CEO dismissal creates a momentum for reorientation and that successor characteristics determine the effectiveness of this intervention. It is proposed that charity affiliated and outsider successors reduce the likelihood of corporate recidivism. A proportional hazards model was conducted on a sample of S&P 1500 firms during the period of 2000-2024 using Violation Tracker data. The results do not support the proposed hypotheses. CEO dismissal does not significantly reduce the likelihood of recidivism, nor does charity affiliation or an outsider status of the successor. The findings of this study suggest that the signal of change produced by dismissal is not translated into substantive reform to prevent future misconduct, and that the effectiveness of successor characteristics in reducing misconduct as shown by Connelly et al. (2022) may not extend to succession following misconduct