I'd be curious about this. I can't believe it's true. Besides that, it's very easy to very quickly appoint an interim CEO from within. Look how quickly Scott Thompson was replaced by Ross Levinsohn.
When the CEOs of RIM stepped down last year, their share rice fell 9.1% on the announcement. When Best Buy's CEO resigned in April, their share price dropped 5.87% that day. When Akamai CEO Paul Sagan announced his intent to step down two months ago, shares fell 6% in after-hours trading. It's pretty much guaranteed that a sudden change in leadership will lead to selloffs. Why can't you believe it?
"Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations."
I honestly get the impression that those shareholders were selling off, not because they thought the company couldn't function temporarily without a CEO, nor because they thought a CEO was necessary for day-to-day operations, but because they saw the CEO stepping down as yet another real sign that the company in question was dying.
I thought we were talking purely about whether shareholders think that "Organisation can function a long time without CEO. People at the very top are completely irrelevant to day to day operations.", and I don't think shareholders selling on the day of the news is a good indicator for saying they do or don't.
I'd say most of them were selling their shares because of they anticipated that the share price will fall as information about CEO stepping down propagates to other shareholders and the other shareholders use the same logic.
So you don't believe that markets function primarily as an information exchange? This is a driving factor in my worldview. You're assuming that all of these investors are primarily concerned with exceedingly short-term gains if you believe this is how they operate. While that's true of day traders, by definition, I don't believe it's true more generally.
I believe it's related to the fact that uncertainty has an actual cost, and the fact that companies without CEOs (or with hastily appointed interim CEOs that were not a strategic plan) tend to not be as focused on the 2-5 year strategy as they should be. I believe it's also related to the fact that a new CEO will typically pursue a different strategy, and that consequently a solid 2 years will be eaten up (generally) in ramp-up to pursue the new goals.
Anyway, just rambling. It's late. HN is great for this.
