TheCorporateCounsel.net

A new study says that how companies talk about CEO departures can have a tangible impact on the success of their succession efforts & their former CEO’s success in obtaining new employment. Here’s the abstract:

This study examines whether the frequently used, seemingly platitudinous, euphemistic language common in CEO departure announcements has real economic consequences. We analyze 1,330 forced exits at U.S. publicly listed firms between 2016 and 2025, where incentives to soften negative information are strongest and euphemistic framing appears in 27% of cases.

Our Employment Outcomes Hypothesis predicts that such framing benefits departing CEOs by muting adverse reputational signals. Accordingly, euphemistically described forced departures are associated with an increase in the odds of reemployment within a year and a reduction in job search duration.

Our Succession Outcomes Hypothesis predicts that euphemistic framing dampens negative inferences about the firm, facilitating faster and stronger successor matches. When no immediate successor is appointed, euphemistic narratives are associated with a shorter succession search, lower odds of early successor turnover, and the appointment of high-quality successors. These findings are robust to alternative specifications, endogeneity corrections, and additional tests.

Overall, our results suggest that the language firms use to explain forced CEO departures is not merely boilerplate but a consequential disclosure choice that shapes labor-market outcomes for departing CEOs and succession outcomes for firms.

I guess the bottom line is that taking the high road pays dividends for everyone involved in the CEO’s departure. Of course, there’s sometimes a fine line between positive spin and pure fiction – and it’s one that companies cross at their peril.

– John Jenkins