Bocconi University
When a CEO steps down or is dismissed, the attention of the board is on how to choose the right executive to succeed that CEO. However, Bocconi University professor Dovev Lavie claims that managing the process of introducing the new CEO and choking the negative sentiment that can arise among stakeholders in a moment of uncertainty could be a more critical task, especially when the new CEO comes from outside the firm.
The effect of such a negative sentiment, which is a form of psychological bias, on a firm’s performance is stronger than the implications of the new CEO’s previous experience and fit between the CEO’s corporate background and the appointing firm’s characteristics.