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Within modern economies firms are embedded in often complex supply chains, creating strong
interdependencies between firms. But what happens when these supply chains are disrupted, what
changes does this bring about? We answer these questions, focusing on what happens when
connections between companies exogenously break because of the unexpected death of the CEO
within one of the firms. We rely on detailed data from the TSR which provides firm-level measures of
start and exit dates of CEOs along with buyer-supplier linkages. This data is matched to detailed
statistics on Japanese firms which enables us to identify the effects of such leadership changes on
supplier networks and subsequent performance. We find that such deaths promote the churning of
suppliers but not of customers of the firm and therefore that these shocks propagate towards upstream
firms through the supply chain. There is also evidence that this affects the short-term performance of
indirectly affected firms as the shock propagates backwards along the supply chain.
