An Empirical Research Of COO Turnover And Corporate Performance

The main function of operation management includes supply chain integration,supply chain risk management,outsourcing,supplier partnership built and management,manufacturing,logistics and distribution.The Chief Operation Manager(COO)or the Operation Executive is the key person who takes in charge with all the operation and supply chain management,which including manufacturing,operation,supply chain,procurement,logistics,distribution,etc.In recent years,the turnover of COO has become a popular topic,especially under the trend of globalization and the development of internet,it is more difficult and challenging to manage corporate in larger size,even to manage multi-national corporations.As a result,the importance of COO and operation executives has also increased.The turnover of top management executive is also an important topic in academic research filed.However,the main research target of current top management executive turnover are the board,Chief Executive Officer/CEO,Chief Financial Officer/CFO,Chief Marketing Officer/CMO and Chief Information Officer/CIO,the research of COO is very limited.On such basis,the paper would focus on 3 main topics:the effect of COO turnover to short-term stock abnormal return;the effect of COO turnover to long-term corporate performance;the influence factor of preference to outsider successor and the ownership of corporates.The paper first did literature review in following aspects:the definition of top management executive and COO;the relationship between top management executive turnover and corporate performance/ownership;outsider and insider successor,end with summary and review of existing literature.Then,the paper collected corporates which have COO turnover in the A share listed enterprises in Shanghai and Shenzhen Stock Exchange Market from 2002 to now,156 corporates and 219 COO turnover events as research sample,using stock abnormal return as proxy variable to evaluate the stock market's reaction,and using PSM-DID methodology to study the effect of COO turnover to long-term performance.Meanwhile,the paper also analyzed the influence factors of outsider or insider successor and the ownership of corporates.The result showed that the COO turnover has positive effect to both stock market and corporate performance,which showed that the COO turnover in China is aligned with"Common Sense Theory".Besides,there is a significant difference between the outsider and insider successor regarding the effect of COO turnover to performance,and the non-state-owned nature has significant influence on the relationship between COO turnover and long-term performance.At last,based on theoretical research and empirical analysis,the paper gave out several suggestions:value the importance of operation management and COO,to enhance efficiency and improve corporate performance;enhance internal governance,which could have better positive affect to corporates;choose successor wisely,build top management executive turnover and succession planning,enhance professional manager market,to create suitable environment for both management talents and corporates.