Placeholder CEOs

This study investigates the unique characteristics of placeholder CEOs in family firms, distinguishing them from professional CEOs. Placeholder CEOs, i.e. non-family executives serving between two family CEOs, play a crucial role in maintaining dynastic control during leadership transitions when family heirs are not ready. Case studies of prominent family firms, such as Bering Bank, Estée Lauder, Ford, H&M, Hermes, Toyota, and Zara, illustrate this succession practice. Our empirical analysis of Japanese family firms from 1949 to 2015 shows that placeholder CEOs constitute about 28% of all non-family CEO appointments. Placeholder CEOs are typically older, better educated, and have longer tenures than conventional professional CEOs. Appointed when patriarchs age and without ready family heirs, placeholder CEOs maintain the performance level of family predecessors, while professional CEOs generally improve firm performance.