The Influence of Incoming CEOs

We introduce a novel index capturing the power of an incoming CEO and explore the association between the appointment of a new CEO and turnover in the top management team (TMT). We document a statistically and economically significant relation between the level of new CEO power and the departure of senior executives. Specifically, we find that in addition to CEO origin, new CEO power is positively related to TMT turnover. We also find that in the post-SOX period, CEO power is more significant in affecting TMT turnover and that directorship and ownership of senior executives reduce departure.