Graduation Year

2025

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Patrick Van Horn

Reader 2

Nayana Bose

Abstract

This study aims to test the market’s efficiency at pricing the success of new CEOs in S&P 500 companies between the years of 2010 and 2018, measured through the market’s initial price response to the announcement of a new CEO. This research is accomplished through the use of a set of econometric regressions measuring the effect of CEO turnover announcements on both short- and long-term share price performance. These regression models necessitated the creation of a unique dataset combining instances of CEO turnover in publicly listed S&P 500 companies with turnover data from Wharton’s Compustat ExecuComp database as well as historical share price records. Results were, by and large, found to be statistically insignificant, suggesting that the market’s initial response to a CEO turnover announcement does not accurately predict long-term share price value under the new CEO. This research lays the groundwork for future investigation into factors predicting long-term CEO success.

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This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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