We propose and test a novel theoretical model that conceptualizes collective employee evaluations of newly appointed CEOs as the result of a dynamic belief-updating process. Following a new CEO appointment, we argue and find that employee evaluations initially increase due to limited early information curated by the organization combined with employees’ optimistic belief updating. Over time, however, these evaluations reach a peak as employees begin to adjust their beliefs to align with observed realities. Eventually, evaluations decline as unmet expectations and emerging negative signals become more salient, which prompts more critical reassessments of the CEO. This belief-updating process creates an inverted U-shaped trajectory of employee evaluations over time, which we term the “CEO honeymoon”. We also propose that this pattern is more pronounced under conditions of heightened uncertainty surrounding the CEO or the organizational context. Supporting this view, we find that outside CEOs are more likely to experience a honeymoon than inside CEOs. Similarly, CEOs appointed to firms characterized by volatile performance, frequent leadership turnover, or a history of downsizing are more prone to honeymoon evaluations than those taking over more stable firms.
