CEO tenure and firm performance: the effects of long-term tenure in major Japanese electrical equipment firms

Purpose This study aims to examine the relationship between firm performance and CEO tenure in major Japanese electrical equipment firms, which operate in an industry that is important within the Asian corporate governance context. Design/methodology/approach Using a 26-year panel dataset (FY1999–FY2024) covering 621 firm-year observations from 24 major Japanese electrical equipment firms, this study estimates the tenure–performance relationship with fixed-effects regressions and cluster-robust standard errors, as indicated by the Hausman test. Findings The results reveal a horizontal S-shaped relationship between firm performance and CEO tenure. This pattern appears to be driven by a small number of founder-led firms with exceptionally long CEO tenures, and should be interpreted with caution given the limited observations and the focus on accounting-based performance. Research limitations/implications The findings extend Hambrick and Fukutomi’s (1991) CEO life-cycle perspective by suggesting that, under certain conditions, long-tenured CEOs may again contribute positively to firm performance. The results may also be informative for Asian firms operating in environments where external governance mechanisms are relatively weak and CEO turnover is less market-driven. Originality/value First, by using long-term panel data from major Japanese firms, this study provides rare empirical evidence on the effects of CEO tenure on firm performance. Second, it identifies a polarized distribution of CEO tenure in Japanese electrical equipment firms, where extremely long tenures, concentrated in a small number of founder-led firms, coexist with short tenures often associated with post-appointment performance declines. These findings contribute to a deeper understanding of CEO succession practices in large Japanese corporations.