Underperforming CEOs Risk Being Fired in Economic Downturns
Aug 18th, 2011
STANFORD GRADUATE SCHOOL OF BUSINESS—When a company does badly, no manager likes to be blamed for things that were really outside his control—like a general downturn in the economy. That goes especially for chief executives. But do boards really take external factors into account when giving CEOs the ax?
A new study finds that more CEOs are fired when their industry or the overall market is doing badly. But, say the scholars, it is not just a case of boards looking for scapegoats during harder times. The CEOs who are let go under such conditions tend to be underperformers anyway…