CEO succession planning is a fundamental responsibility of corporate boards and is seen as a critical process for ensuring leadership continuity and long-term firm success. Despite its widely assumed benefits, many firms fail to engage in succession planning, prompting a critical question: why do so many organizations neglect this essential process? This study challenges the traditional view that succession planning is universally advantageous by examining its effects in two distinct contexts: crisis and ordinary successions. We find that while succession planning can provide benefits in crisis situations—leading to favorable market reactions, reduced likelihood of distress, and firm stability—some of the expected benefits do not materialize in all settings and it may also constrain upward potential in some cases. By considering both its benefits and limitations, we highlight the importance of a nuanced view of succession planning and its varied implications for firm outcomes.
