The Nexus Between Changes in CEO Successor’s Attributes and Firm Performance: Evidence from Emerging Countries
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This paper aims to comprehensively analyze the impact of Chief Executive Officer (CEO) succession on the firm’s post-succession performance, specifically through investigating the direction of changes in CEO successor attributes compared to the predecessor CEO. The paper uses a sample of 1,729 firms in twenty-six emerging countries from 2000 to 2019. The sample yields 9,498 firm-year observations embracing 913 CEO successions. Using fixed effect (FE) regression, the findings conclude that hiring an insider CEO successor significantly decreases the negative impact of CEO succession on the firm’s asset utilization. However, hiring a CEO successor of the same gender, younger, less experienced, or with smaller social networks significantly amplifies the negative impact of CEO succession on the firm’s asset utilization. Moreover, the direction of change in CEO education and busyness has revealed mixed results on the firm’s asset utilization. In addition, hiring an insider, of the same gender, more experienced, with a larger social network and less busy CEO successor significantly decreases the negative impact of CEO succession on the firm’s liquidity. Finally, hiring an outsider, a different gender, younger, less educated, less experienced, with a larger social network or busier CEO successor significantly amplifies the negative impact of CEO succession on the firm’s liquidity. JEL: C12, C23, G41, O16
