The consequences of forced CEO succession for outside directors

We find an increased likelihood of outside director turnover following forc ed CEO succession, especially among those directors that are closely aligne d with the outgoing CEO, own little equity, and make poor replacement decis ions. Directors that remain on the board, however, are more likely to acqui re new directorships than those that remain on the board of a matched-sampl e firm. Overall, the results suggest that outside directors who are not ali gned with the CEO and own relatively large equity stakes are rewarded when they remove a poorly performing CEO and replace him or her with a CEO that improves firm performance.