Washington, June 4 : A new study has revealed that CEOs hired from outside are more likely to be dismissed because Boards of Directors commonly make mistakes during their appointments.
For example, during CEO selection, the board of directors of the hiring firm knows less than the candidates regarding the person’s true competencies.
As a result, it is possible that the board makes a faulty hire and then dismisses the CEO shortly after the succession.
For the study, lead researcher Yan Zhang, associate professor of management, examined 204 company leaders from 1993 to 1998, out of which 55 left their job within three years.