Food For Thought On Long Serving CEOs

According to a September 26 piece by Dennis Berman on The Wall Street Journal's Deal Journal,

the fifth year of a CEO’s tenure is his most tumultuous, and the one where he is most likely to do a deal, according to a fresh study of CEO behavior conducted by two Harvard Law School professors.

The professors John C. Coates IV and Reinier Kraakman crunched numbers on CEO tenure at S&P 500 companies from 1992 through 2004, representing a total of 6,449 analyzed years. They found that during the first four years of a CEO’s stay, the turnover is very low.

Once the fifth year hits, all kinds of weird things start to happen. The number of mergers at such companies surges nearly four-fold in that fifth year. Retirements accelerate as well.

For more on the study check out the professors' report. If you want to perform your own analysis you might consider checking out Liberum's Management Change Database which is far more comprehensive than the data used by the two Harvard Professors.