UNIVERSITY OF COLOGNE

Prominent strides have been made toward diversity in top management teams (TMTs), notably within the Chief Marketing Officer (CMO) position. However, CMOs often face high turnover and short tenures, particularly among diverse CMOs. This phenomenon prompts a need to understand the effects of CMO departures. Using a difference-in-differences approach and causal forests, the study analyzed 117 CMO departure instances matched with non-departures in U.S. public firms. The findings reveal a significant 4.772% decrease in buy-and-hold abnormal return following CMO departures. The negative impact is more pronounced for departures of female and/or non-Caucasian CMOs. This aligns with the Upper Echelon perspective, which suggests that diverse executives contribute unique human resources to the firm. Furthermore, the study found that higher TMT diversity exacerbates the effect of diverse CMO departures. This may be due to the incongruent signals the firm sends regarding its commitment to diversity when a diverse CMO departs.