Relations Between The Properties Of CEO Succession And The Changes Of Firms Performance

CEO succession is an important strategic issue, which is critical to an enterprise’sdeveloping and surviving. And the change of company performance because of CEOsuccession is one of the hot issues that western scholars pay close attentions to in recent years.Under China’s more special governance and management circumstances, CEO has significantinfluence on enterprise’s decision-making. In the meanwhile, the CEO in China, comparedwith foreign countries, due to the larger power-distance in China, perhaps play moreimportant role. Scholars point out that the influence of the position characteristics of a generalmanager or a CEO on an enterprise’s strategic orientation has become a vital governanceproblem that Chinese enterprises are faced with during China’s economic transformationperiod. Then what kind of impact does new CEO succession have on company performance?What kind of CEO should the boards of director select? According to domestic, as well asinternational, researchers, conclusions differ very much, and even contradictory.This study selected the listed company that had happened CEO succession in2010to2012as samples, and analyzed, by means of empirical analysis, the impact of new CEO’scharacteristics on change of company performance. This study selected12indexes, includingReturn On Equity (ROE), total net assets ratio (ROA), total asset turnover (TAT), mobile assetturnover (CAT), inventory turnover (LAT), accounts receivable turnover ratio (NAT) Gearingratio (LEV), Current Ratio (CR), the quick ratio (QR), the growth rate of total assets,operating profit growth, net profit growth, as indicators to evaluate company performance,and analyzed performance evaluation by extracting common factors from fouraspects:developing ability, debt paying ability, operation ability and profitability of theenterprise. The study described the CEO succession characteristics by aspects of CEO’sunconventional succession, CEO’s outside succession, whether the CEO is controlled bycontrolling stockholders, the announcement time of a CEO succession and the age of thesucceeded CEO, and by using multiple regression method, the study proved with empiricaltest the correlation between the change of ROE during the change of CEO and the CEO’ssuccession characteristics. Researches shows that there is a remarkable negative correlationbetween the change of company performance in the changing year and the CEO’s successionin the second half of the year, there is a positive correlation between CEO’s unconventionalsuccession and company performance, there is a negative correlation between the age of theCEO and company performance, and also there is no significant correlation between whetherthe CEO is controlled by the controlling stockholders and company performance, and so is theCEO’s outside succession.