When Apple co-founder Steve Jobs died in 2011, the company's stock immediately dropped. That was one of many examples of how markets can act like living, breathing, emotional creatures in reaction to a company leader's death.

The effect such an event has depends on whether the CEO is perceived as a formidable leader or a poor leader. A study from Notre Dame University and University of Georgia finds that following the unexpected death of a CEO, a company's market cap increases or decreases by $65 million more than it did 60 years ago.

Notre Dame professor Craig Crossland and University of Georgia professors Timothy Quigley and Robert Campbell looked at all 240 U.S. public company with CEOs who died suddenly between 1950 and 2009. The average firm in the sample had a market cap of $1.3 billion.

"When a CEO who is seen as ineffective dies, there is a positive reaction. It sounds a bit macabre but the market sees this as a good thing," Crossland says. "But when you have a great CEO, a lucky and effective CEO, and he or she dies unexpectedly, you get a negative reaction."

Crossland says the increased market reaction is due to the rise in what is called the CEO effect, or the impact a CEO has on a company's bottom line.

"CEOs matter more than they used to, for good and for ill," Crossland says.

In January 2015, Tootsie Roll chairman and CEO Melvin Gordon died unexpectedly and the firm's market value saw an immediate 7 percent increase, or about $140 million, Crossland says. Gordon was in his 90s, but the market reacted positively because Gordon was perceived to be "destroying the firm's value or causing the firm to be not worth as much as it should be," Crossland says.

Other CEO deaths have caused an even greater reaction. In 2002, when Lifeway Foods CEO Michael Smolyansky died suddenly, the company's value dropped by 11.7 percent. When Craig Neilsen of Ameristar Casinos suddenly passed in 2006, the market reacted with a 13.1 percent increase. 

"About 40 or 50 years ago, the market would look at a CEO and say we didn't really like him, or we really did like him, but he didn't make a big difference compared to other CEOs," Crossland says. "This one person doesn't have a big impact one way or the other." 

So, what's the major lesson here?

"The board thinks CEOs matter more now and a lot of value can be lost when a CEO dies. The clear implication here is succession planning. It's never too early to think about who is next," he says.