To investigate the impact of top management succession on organizational performance, this study analyzed the effect of top management changes on profitability using time-series cross-sectional data collected from 62 listed affiliates of 18 chaebol groups engaged in manufacturing over a five-year period from 1990 to 1994. Through the empirical analysis, this study reached the following conclusions. First, top management succession has a negative impact on corporate profitability. Second, compared to cases where only some top managers are replaced, cases where a sole top manager who bore full responsibility for corporate management is replaced by another sole top manager have a negative impact on corporate profitability. Third, recruiting outsiders from within or outside the chaebol group as top managers has a negative impact on corporate profitability, but promoting someone from within the company does not have such a negative impact. Fourth, by the background of externally recruited top managers, promoting an executive from another affiliate within the group to the position of top manager has a negative impact on profitability. Fifth, recruiting someone with prior top management experience as the new top manager can minimize the negative impact on profitability that accompanies succession. The implications of these findings for top management succession in Korean firms are as follows. First, the most realistic succession approach that minimizes the negative impact on corporate profitability is to select a successor from among capable individuals within the organization. Second, if internal circumstances make it impossible to select a successor from within and recruitment must come from outside the group, the candidate should be chosen from among individuals whose capabilities have already been proven through top management experience at affiliates or external firms. In particular, promoting an executive from another affiliate to the position of top manager should be avoided, as it has an extremely negative impact on corporate profitability. Third, another method for minimizing the negative impact of top management succession on corporate performance could be the appointment of multiple top managers. That is, appointing two or more representative directors (presidents) could serve as a way to minimize the negative impact that may be caused by the replacement of a sole top manager who had been solely responsible for management.