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This paper analyzes changes in firm value, performance, and behavior caused by CEO deaths. Many deaths trigger large stock price changes—shareholders believe that some CEOs add shareholder value, but others are seen as not optimally matched or overpaid. These value changes are correlated with CEO and firm characteristics (e.g., deaths of old CEOs tend to add value), but much of the variation remains unexplained. The stock price reactions predict changes in operating performance, indicating that shareholders know which CEOs improve performance and which do not. The evidence suggests that CEOs are important, but also that many reduce shareholder value.

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