Adverse Effect of Top Management Team Loss on the Performance of the Incumbent Firm in the Pharmaceutical Industry

The loss of senior executives and the resulting effects on the firm's performance is relatively under researched. Using managerial human capital perspective and managerial symbolic capital perspective, we empirically tested the effects of the loss of Top Management Team (TMT) executives on the performance of 168 large pharmaceutical firms over 10 years. Our evidence indicates that the number of TMT loss, managerial ranking hierarchy, and international experience of the executives are inversely related to the performance of the firm in the year subsequent to the loss. We conclude that the loss of managerial human resource can predict negative performance in the short-run.