Founder-CEO Appointments Post-Initial Public Offering (IPO): A Cultural and Institutional Perspective

Founder-CEOs tend to be reappointed as CEOs after their firms undergo an initial public offering for various reasons. Nonetheless, findings from the governance literature depict many circumstances and reasons why replacing the... [ view full abstract ]

Founder-CEOs tend to be reappointed as CEOs after their firms undergo an initial public offering for various reasons. Nonetheless, findings from the governance literature depict many circumstances and reasons why replacing the CEO may make sense and be conducive to higher firm performance. However, contrary to Western-based theory and research, founder-CEO appointment in developing economies is common regardless of firm performance, and maintaining founder-CEOs in power may be desirable even after periods of low performance. In this conceptual paper, we outline the cultural and institutional reasons why founder-CEO appointment is commonplace in developing economies. We do so with a particular focus on sub-Saharan Africa.