If you’re valuing a business with a CEO who has been in that job for 20 years, is that a positive or a negative? A new research paper shows that there is a “hump-shaped CEO tenure-firm value relation.” That is, CEOs who stay on too long may be adversely impacting firm value. When do they wear out their welcome? The researchers say the average “turning point” is 14 years, and they note that even successful CEOs “may be associated with declining firm value over the later course of their tenure.” The paper adds to the longstanding debate about CEO term limits and examines existing literature on CEO impact on firm value and performance. To download the paper, click here.
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