Returning CEOs no Real Boost or Bust

Posted by: Jena McGregor on January 11

An interesting piece of research I came across in the course of reporting this story on Howard Schultz’s return to the helm at Starbucks, which we first blogged about here:

Researchers at the Fisher College of Business at Ohio State University have studied how companies fare when boomerang CEOs—former leaders—return to their thrones. In the case of a beloved former leader returning to a flailing firm (say that three times quickly), you might expect a super boost to their financials as employees get excited again. But looking at the larger realm of returning CEOs doesn’t show that they outperform their peers.

Professors Rudi Fahlenbrach and Bernadette Minton found that of the 67 scenarios they studied between 1993 and 2005 in which a former CEO returned to helm a company again, most of the companies performed about the same as a sample peer group—not really statistically worse or better—in the two years after their return. The metrics they used were return on assets and operating cash flow.

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