One Man's Death is Another Man's Bread: The Effect of a CEO's Sudden Death on Competitors' Strategic Investments

We examine how a CEO's sudden death influences competitors' strategic investments. Consistent with the literature on death awareness and the expectancy-valence model, we suggest that a CEO's unexpected death can trigger competitors' competitive moves. Using a difference-in-differences methodology, we show that a competitor increases strategic investments after its peer firm experiences a CEO's sudden death. This effect becomes stronger when the competitor and its peer firm share similar resource allocation profiles or the competitor possesses greater organizational slack. Our supplementary analysis shows that a competitor increases its strategic action intensity following a CEO's sudden demise at a peer firm. This study contributes to the competitive dynamics literature by highlighting how critical events affecting the cognitive base and values of strategic leaders expose strategic vulnerability and in turn evoke competitive moves by competitors in response to the events.