Thrown under the bus : the signaling role of CMO dismissal and its effect on firm value

The aim of this study is to investigate the impact of CMO dismissal on the firm's financial performance. Regression analysis was used to test the theoretical model based on a data set of 99 CMOs leaving their firms. Drawing upon market signal and contingency theories, the study finds evidence for the positive effect of involuntary CMO departure on the firm's net market value and finds a firm's profitability moderates this effect such that the impact of CMO dismissal is larger for less profitable firms.

Keywords: Chief Marketing Officer (CMO); CMO relevance; firm performance; profitability; top management team (TMT)

Introduction

Starbucks has replaced their chief marketing officer five times in six years (McGovern and Quelch [29])—a dismissal rate that exceeds that of many top executive positions (Linton [27]). Trends such as this both exemplify and perpetuate questions regarding whether chief marketing officers (CMOs) have demonstrated credibility, relevance, and an ability to contribute to a firm's financial performance (Gyrd-Jones, Helm, and Munk [17]). Indeed, many CEOs continue to question the legitimacy and utility of appointing CMOs (Fournaise Marketing Group [15]; Germann, Ebbes, and Grewal [16]).

Studies investigating the efficacy of CMOs have produced mixed results, with some studies indicating positive effects on firm value, on strategic decisions, financial performance (Germann, Ebbes, and Grewal [16]) and new venture formation (Homburg et al. [20]), thereby generally confirming the importance of CMOs within the top management team (Weinzimmer et al. [49]). Other studies, however, caution that the influence and positive impact of a CMO is contingent on a number of circumstances (Nath and Mahajan [35]), such as the strength of the customer base the CMO must contend with (Boyd, Chandy, and Cunha [4]). Still further, other studies find that the existence of a CMO in the top management team (TMT) has no effect at all on a firm's performance (Nath and Mahajan [34]), and that a firm can noticeably increase its marketing influence without increasing the power of the CMO (Lamberti and Noci [24]). There is a wide scholarly interest in different facets of the CMO function and calls for further research evidence investigating the importance of CMOs position to firm performance (Bansal et al. [2]). Marketing scholars and practitioners remain unconvinced about the CMO's performance impact and implications (Germann, Ebbes, and Grewal [16]; Kim et al. [23]). The value of the CMO for a firm's vitality and performance thus continues to be an enduring question (Germann, Ebbes, and Grewal [16]; Lamberti and Noci [24]).

The purpose of this paper is to add to the literature on CMO legitimacy by investigating the effects of CMO dismissal on firm value. To date, most studies have measured CMO influence based on a CMO appointment, adopting an assumption that CMO appointment is indicative of a firm's affirmation of CMO importance in strategic decision-making (Boyd, Chandy, and Cunha [4]; Vafeas and Vlittis [44]). In spite of these merits, however, the validity of this approach remains uncertain because market reactions to CMO appointments are based largely on investor perceptions of the CMO's previous marketing and sales experience. The use of CMO dismissal therefore allows for an alternative assessment of CMO value.

In this study, therefore, we investigate the effects of CMO dismissal on firm value, drawing upon market signaling and contingency theories to formulate our predictions. Our theoretical account stipulates that market reactions to CMO dismissal are suggestive of CMO relevance: that if the CMO's leaving does not matter then the firm's stock return should not be impacted, but if the CMO is relevant then the stock return will be affected. Furthermore, if a firm experiences low profitability, changes in the TMT should more likely signal performance improvement efforts. Thus, when a CMO is involuntarily dismissed, it signals that the firm realizes its performance is below par and is serious about fixing it. Thus, we seek to add to the existent literature on CMO impact by attempting to answer two main questions: (1) how does a CMO's involuntary dismissal impact firm value? and (2) does this impact vary as a result of firm profitability? In order to rule out alternative explanations for CMO dismissal on abnormal returns, the study controlled for several variables previously identified in the TMT literature as being relevant. Figure 1 depicts the conceptual model. The key insight of this study is that involuntary CMO departure affects firm financial performance and is suggestive of the CMO's importance within the TMT. To our knowledge, this study represents the first attempt to consider the influence of CMO dismissal on stock return, and to assess how this effect varies due to the firm's profitability condition.

Graph: Figure 1. Conceptual framework.

The research paper first presents the theoretical background and hypothesis. Then, the paper outlines the methodology and data analysis used in the study. Subsequently, the paper reports and discusses the results prior to presenting the practical implications and the study's limitations including direction for future research.

Theoretical background and hypothesis

Signaling theory refers to a firm's ability to convey meaningful information about its strategy, leadership, and capabilities to parties such as consumers, markets, and potential investors that can advance the firm's situation and future success (Connelly et al. [8]; Spence [41]). Organizations can reduce information asymmetry among their constituents by undertaking actions that signal the firm's quality and legitimacy (Spence [41]). Signals can be conveyed through a number of mediums, including board characteristics (Certo [7]; Miller and Triana [31]), the involvement of founders and investors (Busenitz, Fiet, and Moesel [5]; Elitzur and Gavious, [11]), and even financial statements (Zhang and Wiersema [54]). One specific example is a CMO's managerial capital signaled by the persons education, background, and experience, indicates what a new CMO brings to the company (Wang, Saboo, and Grewal [48]).

Among other things, firm signals can emanate from the publicizing of TMT characteristics (Lester et al., [26]). For example, research in strategy has drawn upon signaling theory and TMT composition to explain IPO performance. Because uncertainty regarding firm quality is high in the case of IPO firms, advocates of signaling theory recommend that firms signal the favorable aspects of their leadership team to outside constituents in order to improve IPO value (Beatty [3]; Carter and Manaster [6]). In addition, corporations can announce progress and changing intentions via pronouncements about TMT ownership and tenure (Connelly et al. [8]). Thus, TMT turnover is not only a means toward affecting the objective characteristics of a firm, but of also shaping constituents' subjective evaluations of it.

Research indicates that firms announce to shareholders the dismissal of executives as a means of signaling a positive intention to change (Stiglitz [43]; Elitzur and Gavious [11]; Vafeas and Vlittis [44]). The validity of this signal can be explained by contingency theory, which articulates how the executive uses structural changes, including TMT turnover, to manage responsiveness to environmental contingencies. Firms endeavor to find a match between environmental contingencies, structural contingencies, and strategic choices (Donaldson [10]; Lawrence and Lorsch [25]; Zeithaml, Varadarajan, and Zeithaml [53]), and executives must make choices in the face of environmental uncertainty and under the constraints of limited time and processing capabilities. The presence of a CMO therefore indicates complexity and uncertainty in critical aspects of the marketing domain (Nath and Mahajan [34]); and the firing of a CMO can be indicative of structural changes designed to improve performance in this area—thereby signaling an executive's change efforts.

The extent to which CMO departure is interpreted by outside constituents as a signal of deliberate executive planning, however, depends to a large extent on whether the departure is voluntary. CMO departure is most indicative of positive change efforts when CMO dismissal is involuntary, suggesting that the CMO is underperforming and that the firm is striving for improvements in its marketing strategy (Nath and Mahajan [36]). Consequently, the firing of a CMO can be viewed as a step toward positive change for the firm, whereas voluntary CMO turnover is more likely to be interpreted as an individual initiative reflecting idiosyncratic preferences. Thus, outside constituents such as markets and shareholders will consider the involuntary dismissal of a CMO positive news signaling the firm's desire for quality improvement and the pursuit of more functional marketing strategies. Based on this reasoning, we proffer the following hypothesis:

Hypothesis 1: Involuntary CMO dismissal will have a larger positive impact on the firm's abnormal stock returns than voluntary leaving.

The strategic management literature widely supports the notion that senior executives impact strategic choices and firm performance (Hambrick and Mason [19]; Rust et al. [39]). Consequently, when firm performance is low, the chance of executive dismissal increases (Murphy [33]; Engel, Hayes, and Wang [12]; Farrell and Whidbee, [14]). And as the firm intentionally changes the TMT in an effort to meet its shifting environmental demands (Wiersema and Bantel, [51]), that in turn helps to improve firm performance (Virany, Tushman, and Romanelli [46]).

As noted above, signaling theory postulates that firms signal their strengths and intentions by communicating information to the market (Verrecchia [45]; Miller [30]). If a firm therefore experiences low profitability, changes in the TMT will be more likely to clearly signal performance improvement efforts. Given their eminence over the marketing domain, CMOs may be the first to be scrutinized for their impact on poor performance; and indeed, CMOs have the shortest tenure among TMT members (marketoonist.com 2013). Thus, when a CMO is involuntarily dismissed, it signals that the firm realizes its performance is below par and is serious about fixing it. Therefore, the impact of CMO dismissal on firm outcomes should be larger among unprofitable firms than profitable firms:

Hypothesis 2: Profitability moderates (attenuates) the positive effect of involuntary CMO dismissal on the firm's abnormal stock returns.

Methodology

Sample and data collection procedure

Estimating stock responses to CMO dismissal is challenging due to the fact that other exogenous or endogenous shocks can impact the stock return simultaneously. Event studies should therefore seek to separate the impact of CMO dismissal from other possible effects (Boyd, Chandy, and Cunha [4]), and we duly recorded several control variables in addition to the variables of theoretical interest. We consulted a collection of data sources to assess the study's variables: the firm's announcement, the firm's 10-K, annual reports, Fortune, COMPUSTAT, LexisNexis, and Factiva. The data extend from 1995 to 2012, and Table 1 provides a summary of measures and data sources for the independent variables used in this study.

Table 1. Summary of measures and data sources.

Conceptual variables	Measure	Data source
CMO voluntary leaving	If the announcement: Clearly addresses it CMO being promoted or upgraded	Firm's announcement & firm's 10-K
CMO involuntary leaving	If the announcement: Clearly addresses it CMO left after less than a year and the announcement addresses it indirectly through: • Eliminating the position • No instant replacement for the CMO • Another executive takes the position over.	Firm's announcement & firm's 10-K
Abnormal stock returns	The abnormal returns following CMO departure (three days after leaving including the actual leaving day)	EVENTUS
Profitability (ROA)	Net Income/Total assets	COMPUSTAT
New CEO	Whether the firm has a new CEO within 6 months before the CMOs departure	Firm's announcement or firm's 10-K LexisNexis, Factiva
Firm size	The natural logarithm of the total assets owned by the firm	COMPUSTAT
Market value	Firm's stock price on the public market	COMPUSTAT
Financial leverage	The ratio of long-term book debt to total assets	COMPUSTAT
Number of employees	The exact number of firm's full-time and part-time employees	COMPUSTAT

Data were collected from the list of Fortune 500 largest (based on revenue) publicly traded firms on the US stock market aggregated for the period 2000 to 2013. Companies include, for instance, Amazon, Apple, IBM, Ford, Walmart, Yahoo, and Target. Data were collected from publicly traded firms on the US stock market such that the impact of CMO dismissal on firm value could be assessed via stock returns. Because firms are not required to report CMO changes in financial reports, however, the data collection procedure required access to a wide variety of sources such as annual reports, 10 K and COMPUSTAT, Factiva, and Lexis Nexis. Determining whether CMO changes were voluntary or involuntary also required a search of multiple announcements and secondary research resources. Consistent with Nath and Mahajan ([34]), we included those who served as CMOs for their entire duration of employment within the firm. The initial sample included 119 entries, after which twenty observations were deleted due to missing data. The final sample consisted of a combination of 99 CMOs leaving their firms (14 voluntary − 85 involuntary). This sample size is consistent with prior studies (e.g., n = 88;). For example, "to test the relationship between CMOs and firm value", Boyd, Chandy, and Cunha ([4]: 1167) study sample consisted of 88 CMO announcements by publicly traded firms.

Measures

Independent variable: CMO dismissal

We collected data on CMO departures from a number of sources including COMPUSTAT, 10k reports, Factiva, and firms' announcements. We also determined whether the CMO left voluntarily or was terminated, based on data acquired from a number of secondary sources. Determining whether a CMO left a firm involuntary can be challenging because firms often avoid disclosing this kind of information. Therefore, we adopted and modified the CEO dismissal assessment utilized by Wiersema and Zhang ([52]). They considered a CEO's leaving as a dismissal based on any one of the following: (1) the announcement clearly states it, (2) news around the departure event provides strong evidence for the dismissal, (3) the CEO resigned immediately after a board meeting, or (4) the CEO left with no prompt replacement. In our study, we considered a CMO's leaving as involuntary based on any one of the following: (1) the firm's announcement clearly addressed it, (2) the CMO left the firm after less than a year in the position, (3) the announcement mentioned the CMO position would be eliminated, or (4) there was no instant replacement for the CMO. According to these circumstances, we coded the voluntary leaving as 0 and involuntary leaving as 1.

Dependent and moderator variables

Within event study methodology, abnormal stock returns have been frequently applied as a proxy measure for estimating market reactions to a specific event believed to impact firm value (Boyd, Chandy, and Cunha [4]). In this study, the Fama–French model estimated the abnormal returns on a (−3, +3) event window. Firm value that occurs as a result of CMO dismissal is calculated by differentiating the normal return that would have obtained without the dismissal event and the returns that the firm acquired as a result of the CMO dismissal (Fama and French, [13]).

Return on assets (ROA) was employed as an indicator of firm profitability because it represents an established metric for assessing firm performance (Ambler and Roberts, [1]; Joskow et al. [21]). We computed the return on assets as the ratio of net income to total assets. Net income and total assets were obtained from the COMPUSTAT database.

In order to rule out alternative explanations for CMO dismissal on abnormal returns, we controlled for several variables previously identified in the TMT literature as being relevant. these controls included the instalment of a new CEO, firm size, market value, and financial leverage. We controlled for the newness of the CEO because research indicates that a new CEO might initiate their tenure with a change in firm structure or strategy that encourages the CMO's leaving decision (Westphal and Fredrickson [50]). CEOs were coded as 1 if they were appointed six months before the CMO departure and 0 otherwise.

In addition, the impact of CMO dismissal might be contingent on the size of the organization. Firm size may moderate the effect of CMO dismissal on firm value because the customer power base may vary with firm size and influence CMO's managerial discretion to significantly varying degrees. We utilized two indicators of firm size to control for this variable. Consistent with prior literature, both the number of employees and total assets served as indicators for firm size (Boyd, Chandy, and Cunha [4]; Waldman et al. [47]). Finally, we controlled for two additional variables known to capture some of the variance of firm financial performance (Morgan and Rego [32]; Luo, [28]): (1) market value – the worth of the firm as denoted in the stock market, and (2) financial leverage – the ratio of long-term book debts to total assets. The latter was calculated from data retrieved from the COMPUSTAT. Research suggests that a CMO's will have more discretion in performing their role in higher performing firms (Boyd, Chandy, and Cunha [4]).

Data analysis and results

Several robustness checks were conducted to ensure the sample did not include significant biases, and to rule out alternative explanations common in event studies. First, confounding events were eliminated. In this study, a confounding events included mergers and acquisitions, new product launches, and CEO turnover within a 3 day window of the CMO dismissal (Srinivasan and Bharadwaj [42]). Second, the model was checked to determine if it was free from the serial correlation by applying the Durbin–Watson test on the data. The error in the model was not serially correlated, as the value of the Durbin–Watson statistic (2.34) fell within the accepted range of 1.5–2.5. Also, three outliers were eliminated from the analysis because their respective values for the independent variable were more than three standard deviations away from the mean. Overall, these robustness checks improved the model and the reliability of its inferences.

Correlations between the independent variables and control variables are less than 0.57, as shown in Table 2. The variance inflation factors (VIFs) are under the permissible limits of 10; thus, multicollinearity concerns are ruled out (Neter and Wasserman [38]). We also log-transformed the independent and control variables in order to rule out any potential inverse causality issues. Estimates were derived using the following model:

Table 2. Descriptive statistics and correlation matrix.

Covariate	1	2	3	4	5	6	7
CMO departure (log)	1
New CEO (log)	0.112	1
Firm total assets (log)	−0.071	0.029	1
Market value (log)	−0.038	0.185	0.566	1
Financial leverage (log)	−0.078	−0.286	0.005	−0.153	1
Number of employees (log)	−0.073	−0.098	0.548	0.537	0.18	1
Profitability (log)	−0.021	−0.145	0.396	0.336	−0.124	0.245	1
Mean	0.14	1.43	6.93	7.71	0.47	2.28	−0.01
Standard deviation	0.35	0.5	1.79	2.13	0.52	1.69	0.19
Sample size	99	99	99	99	99	99	98

1 |Correlation| >0.20 is significant at p <.05

Abnormal Stock Return = β0 + β1 CMO leaving + β2 CEO + β3 firm size + β4 Market Value + β5 Financial Leverage + β6 Number of Employees + β7 Profitability.

Measurement model results

Results from the regression models are reported in Tables 3–5. As reported in Table 3, the adjusted R-squared of the model without the moderating effect is 23.2%, whereas the adjusted R-squared of the model that includes profitability as a moderator is 37.8%. The 14.6% increase between model 1 and 2 is statistically significant, thereby supporting the hypothesized relationship between CMO dismissal and its effect on abnormal stock returns. Adjusted R-squared is commonly uses to evaluate a model's predictive power and it represents the exogenous variables', CMO dismissal and profitability, individual or combined effects on the endogenous latent variable, firm abnormal stock return (Hair et al. [18]).

Table 3. Model summary.

Change statistics	Durbin-Watson
R square change	F change	df1	df2	Sig. F Change
0.232	3.803	7	88	0.001
0.146	20.408	1	87	0	2.349

Table 4. The effects of CMO departure and control variables on firm value.

Independent variables	Standardized Beta	p-Values	VIF Tol
Constant
CMO departure (log)	0.324	0.001	1.010 0.990
New CEO (log)✓	−0.076	0.463	1.216 0.822
Firm size (log)✓	0.312	0.010	1.594 0.627
Market value (log)✓	0.179	0.158	1.817 0.550
Financial leverage (log)✓	0.163	0.119	1.221 0.819
Number of employees (log)✓	−0.286	0.024	1.772 0.564
Profitability (log)	−0.214	0.040	1.203 0.831

• 2 Note: ✓ Denotes control variables.
• 3 Codes: CMOLeaving, CEOLog, FirmsizeLog, MkvaLog, FinancialeveragLog, EMP_Log, Profitability.

Table 5. The effects of CMO departure, control variables, and interaction term on firm value.

Independent variables	Standardized beta	p-Values	VIF Tol
Constant
CMO departure (log)	0.340	.000	1.012 0.989
New CEO (log) ✓	−0.075	.422	1.216 0.822
Firm size (log) ✓	−0.260	.018	1.613 0.620
Market value (log) ✓	0.168	.143	1.818 0.550
Financial leverage (log) ✓	0.166	.079	1.221 0.819
Number of employees (log) ✓	0.19	.062	1.806 0.554
Profitability (log) ✓	−0.433	.000	1.533 0.652
CMO & PRofitability Interaction	−0.445	.000	1.359 0.736

• 4 Note: ✓ Denotes control variables.
• 5 Codes: CMOLeaving, CEOLog, FirmsizeLog, MkvaLog, FinancialeveragLog, EMP_Log, Profitability

Next, as reported in Table 4, we found that the coefficient for CMO dismissal is positive and significant (β1 = 0.32, p <.001), meaning that a CMO's involuntary departure has a positive effect on abnormal stock returns. In addition, the presence of a new CEO did not demonstrate a significant effect (β2 = −0.076, p <.460). As such, these findings support H1, which states that involuntary CMO departure has a significant effect on abnormal stock returns. Furthermore, all control variables excepting those related to firm size were non-significant. However, variables related to firm size—including total assets (β3 = 0.31, p <.010) and number of employees (β6 = −0.28, p <.024)—were significant, indicating they contribute to variance explained in the model.

Finally, as reported in Table 5, the profitability coefficient was negative and significant (β8 = −0.44, p <.000), indicating that profitability moderates the relationship between CMO dismissal and CMO net value. Thus, H2 was supported, meaning that involuntary CMO departure had a larger impact on the stock returns of firms experiencing low profitability than those enjoying high profitability (Figure 2).

PHOTO (COLOR): Figure 2. The interaction effect of profitability on the CMO dismissal – stock return relationship.

Discussion

Marketing scholars have called for investigations of the influence and value of marketing leaders (Rust et al. [39])—a call particularly apropos for CMOs given their relatively recent addition to the TMT. Although some work has investigated the effect of CMOs on firm financial performance (Nath and Mahajan [34]; Boyd, Chandy, and Cunha [4]) and on new firm ventures (Homburg et al. [20]), this study is the first to examine the impact of CMO departure on firm financial performance. It contributes to the growing body of CMO literature by, (1) ascertaining the effect of CMO leaving, (2) highlighting the differential impact of voluntary versus involuntary departure on firm financial performance, and (3) providing a consistent theoretical account via signal theory that explains these effects.

Our findings suggest that announcing involuntary CMO departure positively affects firm financial performance, consistent with our assertion that involuntary dismissal is a signal of executive change efforts. In addition, we found that firms experiencing less profitability tend to realize greater gains in stock performance through such an announcement, over more profitable firms. This finding is also consistent with our theoretical account that a lack of firm profitability underscores the need for change, thereby adding resonance to the signal of CMO dismissal as a positive change effort. This is consistent with findings of Coughlan and Schmidt (1985) that found involuntary CEO dismissal is more likely in the worst performing enterprises than in the best performing enterprises (Kesner and Sebora [22]). Similarly, Nath and Mahajan ([36]) found that CMO dismissals increased when enterprise revenue growth is weak, while CEO appointment has a small yet positive effect on profitability, suggesting marketing's role vis-à-vis performance metrics.

Several hypotheticals have been proposed to justify why CMOs hold the least secure job at the top management team table (Linton [27]). This study offers an empirically supported explanation by suggesting that CMO dismissal connotes positive news and signals constructive change. Thus, firms may at times utilize CMO dismissal to not only restructure their TMT, but also to stimulate a positive impact on market returns.

Practical implications

This study has several managerial implications for how CMO dismissal can impact the stock market and, consequently, how marketing creates value for the firm. Data in this study indicate that changes in marketing leadership and function lead to favorable reactions in the stock market, suggesting that outside constituents view marketing as a legitimate function that impacts firm strategy and performance. Thus, these findings help establish a link between firm activities in the marketing domain and financial metrics considered to be the definitive measure of firm performance. All control variables employed within the research analysis, excepting those related to firm size, showed that the significant relationships found within the model between the independent constructs, CMO Dismissal and profitability, and dependent construct firm abnormal stock return were not stemming from confounding variables. Firm size moderated the effect of CMO dismissal on firm value because the customer power, which varies with firm size, potentially influence CMO's managerial discretion to significantly varying degrees.

Theoretical implications

Previous studies suggest that CMO impact on firm financial performance is contingent on several variables related to managerial discretion (Nath and Mahajan [34]; Boyd, Chandy, and Cunha [4]), but this study shows a very direct impact of marketing leadership on financial measures. The results are also consistent with Nath and Bharadwaj ([37]) study that affirm the positive CMO–firm performance relationship which establishes linkages between the CMO presence and enterprise sales growth. Organizational leaders would do well therefore to recognize marketing's impact on firm performance and proactively seek ways to capitalize on it when communicating with investors. Furthermore, leadership should consider the timing and context of the firm's financial situation when choosing whether to publicize CMO dismissal as a signal to shareholders and potential investors. Specifically, announcing CMO dismissal does not seem to be prudent for a firm enjoying prosperity. Firm leaders in this context might therefore apply the common approach of announcing CMO departure by de-emphasizing the reasons for it. Alternatively, less profitable firms should take advantage of firing their CMOs by widely publicizing the dismissal as indicative of positive change efforts. In this latter context, CMO dismissal will likely be perceived as encouraging news that reflects the firm's commitment to performance improvement.

Limitation and future research

Future research can help address a number of limiting aspects of the current study. First, although our sample size is consistent with other studies (Boyd, Chandy, and Cunha [4]), it nevertheless remains less than optimal number of data points related to CMO dismissal available. More importantly, determining the actual reason why an executive leaves a firm is challenging, as such information is often unavailable or vague as to the nature of the dismissal. The procedures used to determine executive dismissal were based on varied approaches available in the marketing and related literatures. However, no single approach has absolute validity, nor can it fully eliminate uncertainty about the nature of CMO departure, independent of the firm's disclosure. In the future, therefore, inter-rater reliability techniques can be implemented in order to increase certainty about the reasons for CMO departure. Meanwhile, the data on the voluntary or involuntary nature of CMO departure will benefit from replication studies, as well because more than three fourths of CMOs reportedly leave voluntarily.

In addition to improving the sample size, validity, and generalizability of our findings, future research can also investigate potential moderators related to the dismissal procedure. The first of these that can be tested is the strategic orientation of the firm, investigating how and whether the impact of CMO dismissal varies according to strategy type such as cost efficiency versus organic growth. One possibility is that involuntary CMO dismissal might have a larger effect for firms perusing cost efficiency strategies as opposed to differentiation and organic growth because marketing is more likely to be seen as a cost rather than an investment. A second potential moderator includes CMO attributes such as role-specific experience and level of education, and how these attributes influence strategy and performance (Hambrick and Mason [19]), as well as how they affect outsider interpretations of CMO turnover events.

Third, future work can extend the current study to include a broader set of dependent measures, including accounting and finance measures such as market value and financial leverage, as well as marketing measures such as reputation and customer satisfaction (Said et al. [40]). Though some of these indicators might be difficult to measure (particularly marketing indicators), it will be helpful to investigate how firm reputation and brand power are affected by involuntary CMO dismissal.

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