Taking charge and taking stock

New CEOs enter an emotionally charged environment by a sharp increase in visibility, responsibilities, expectations, and job vulnerability. Rather than experiencing a “honeymoon” period, they are busy learning about the firm, developing relationships with stakeholders, and determining the firm’s strategic direction. These heightened job demands and vulnerability create a distinctive context in which CEOs’ regulatory foci may shape their motivation to engage in strategic change. Promotion focus emphasizes growth, development, achievement, and the pursuit of maximal goals, whereas prevention focus emphasizes security, responsibility, and the avoidance of losses. Accordingly, it is important to ask: How does a new CEO’s regulatory focus shape the extent of strategic change following CEO succession?

Jieun Lee, assistant professor in the department of management, examines this question in a co-authored article, “Taking charge as a contextual cue: How new CEO regulatory focus influences strategic change,” published in the Journal of Management (2025).

The authors identified new CEOs in S&P 1500 firms between 2000 and 2020 and analyzed the effect of CEOs’ regulatory foci using shareholder letters from annual reports. The final dataset included 1,550 observations of 808 new CEOs across 569 companies.

Lee and her collaborators found that new CEOs high in prevention focus experience a regulatory fit because the heightened responsibility, vigilance, and job vulnerability associated with becoming CEO align with their loss-avoidant goal orientation. This fit motivates them to engage in more strategic change early in their tenure than CEOs low in prevention focus. Importantly, this does not mean that prevention-focused CEOs become more risk-seeking. Rather, they may view strategic change as a way to protect themselves  and reduce the risk of dismissal, making change a means of fulfilling their responsibilities and maintaining security. Consequently, high promotion-focused new CEOs engage in less strategic change than low promotion-focused CEOs during the early stage of their tenure

As the authors write, “the sharp increase in job demands and job vulnerability that executives experience when they first become CEO shifts their regulatory fit and subsequent motivation to engage in strategic change in ways that prior theory would not predict.”

View the paper published by the Journal of Management, “Taking charge as a contextual cue: How new CEO regulatory focus influences strategic change.”