Placeholder CEOs

Authors: Mario Daniele Amore, Morten Bennedsen, Vikas Mehrotra, Jungwook Shim, Yupana Wiwattanakantang

Abstract

This paper introduces a novel category of professional CEOs in family firms. Placeholder CEOs are non-family executives in-between two different family CEOs. Notably renowned family firms, such as Toyota, Zara, H&M, Hermes, Berings Bank, Ford, and Estee Lauder, have engaged placeholder CEOs. Our comprehensive analysis of publicly traded Japanese firms covering the period from 1949 to 2009 reveals that placeholder CEOs account for about 28% of professional CEO appointments, with a notable one in ten family firms opting for their appointment Placeholder CEOs exhibit distinctive characteristics, such as older, better educated, and have longer tenures when compared to the conventional professional CEOs. Interestingly, placeholder CEOs maintain performance levels similar to their predecessor family CEOs, while professional CEOs improve firm performance. Our analysis indicates the divergent roles played by placeholder CEOs in enabling founding families to maintain control during periods when family heirs are not yet ready for leadership.