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Wall Street Rewards CEOs Who Talk About Their Strategies

by Richard Whittington, Basak Yakis-Douglas, Kwangwon Ahn

ARTICLE | Havard Business Review | December 28, 2015


Abstract


Conventional wisdom says investors dislike uncertainty. A CEO succession presents a time of enormous corporate uncertainty — and thus a time when investors may become especially skittish.

But our research shows that new CEOs can allay investors’ fears by talking about their strategic plans for the company. For example, when Daniel Zhang, the new chief executive of Chinese ecommerce giant Alibaba, talked about his proposed new “Let’s Go Global” strategy one week after his appointment, the company’s stock price rose immediately by 1%, the equivalent of $2.2 billion, with further rises in the following days.