On the day of the succession, the stock market returns of the companies that appointed an outside CEO went sharply up, while the returns of the companies that appointed an inside CEO did not. The market was rewarding the appointment of an outsider. And apparently the market was onto something. Firms that appointed family CEOs experienced large declines in performance in the subsequent three years, compared to firms that promoted unrelated CEOs: their return on assets fell by 14 percent.98
