“CEO Tenure Is Getting Shorter..” the Wall Street Journal writes. Research indicates that the optimal tenure is 4.8 years. Median CEO tenure at large cap companies was five years in 2017, one year less than the median in 2013 (Equilar). To quote the article, “Xueming Luo, professor at Temple University’s Fox School of Business and one of the authors of a widely cited 2012 study, said CEOs are most effective in the initial years because they are more open to outside opinions and less risk-averse. ‘The search for external knowledge tends to end.’ ”
We believe the above is consistent with CEO personality research, particularly that of David Larcker and Charles O’Reilly who use the Big 5 personality model as the underpinning of their research.
The personality trait “Openness” speaks to Dr. Luo’s point in the WSJ article. Openness: “CEOs who score highly in this area are intellectually curious, value uncommon thought processes, are creative thinkers, are less prone to selective perception bias, exhibit strategic flexibility and encourage experimentation and risk-taking.”
See our full report – “CEORater Big 5 Personality Analysis“.