Firm performance and Executive Retirement: An Achievement Goal Perspective

Firm performance and Executive Retirement: An Achievement Goal Perspective

Mo Wang
University of Florida
 

In this research, we took an achievement goal perspective to understand how firm performance is associated with executives' retirement decisions.

We tested our hypotheses through two studies. In Study 1, we analyzed archival data of 1,840 chief executive officers (CEO) from S&P 1500 firms to examine the curvilinear effect of firm performance on executive retirement. Additionally, a subsample of 653 CEOs was used to test the moderating effects of executive goal orientations on the curvilinear relationship between firm performance and executive retirement. In Study 2, we surveyed 363 executives across two time points to replicate findings from Study 1.

Our findings suggest that firm performance has a U-shape relationship with executive retirement such that the relationship is negative at the lower and positive at the higher end of firm performance. In addition, learning goal orientation moderates the relationship between firm performance and executive retirement; the negative relationship is weaker (stronger) at the lower end of firm performance for executives with higher (lower) learning goal orientation. Performance-prove goal orientation also moderates the relationship between firm performance and executive retirement; the positive relationship is stronger (weaker) at the higher end of firm performance for executives with higher (lower) performance-prove goal orientation.

The findings are discussed in terms of its implications to executive career management, retirement processes, and late adulthood development.