Limbach, PeterPeterLimbachSchmid, MarkusMarkusSchmidScholz, MeikMeikScholz2023-04-132023-04-132015https://www.alexandria.unisg.ch/handle/20.500.14171/107313This study suggests that the effect of CEOs on the firms they run varies over time. We document an inverted U-shaped relation between CEO tenure and firm value as well as M&A announcement returns, consistent with the posited net effect of benefits (e.g., learning, relations) and costs (e.g., aversion to change, entrenchment) arising dynamically over the CEO’s time in office. We find economically meaningful variation in the point in time at which costs of tenure start to outweigh benefits depending on a firm’s economic environment that affects costs and benefits of tenure. Nonparametric estimations, exogenous shocks to the cost-benefit relation of tenure, and an analysis of CEO sudden deaths further support our findings.en(within-)CEO heterogeneityCEO tenureCEO term limitseconomic environmentfirm valuemergers and acquisitionsworking paper