Internal candidate pool and CEO turnover in Japan: A pre-registered report

Abstract
Although it is well known that internal candidates dominate CEO successions, the implications for monitoring function of CEO turnovers remain underexplored. This pre-registered report argues two opposing predictions: first, the decreased costs of replacing incumbent CEO lead to better incentives; second, entrenchment driven by less strict monitoring by internal candidates leads to less alignment of incumbent CEOs with the interests of shareholders. To identify these two possible predictions, we examine the sensitivity of CEO turnover to two firm performance components (luck and skill) in Japan, in which lifetime employment and age structure matter when selecting new CEOs. This study contributes to a new understanding of how a larger CEO internal candidate pool affects the performance evaluation of management turnover.

Authors: Ryosuke Fujitani, Yuho Kusaka, Donglai Ning

ICS Faculty:  Ryosuke Fujitani

Published in: Pacific-Basin Finance Journal

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Ryosuke Fujitani, Yuho Kusaka, Donglai Ning, Internal candidate pool and CEO turnover in Japan: A pre-registered report, Pacific-Basin Finance Journal, Volume 91, 2025, 102788, ISSN 0927-538X, https://doi.org/10.1016/j.pacfin.2025.102788. (https://www.sciencedirect.com/science/article/pii/S0927538X25001258)