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Li Zhang

DBA Graduate - 2019

Thesis title

CEO Turnovers and companies performance-evidence from Chinese listed companies


Jie Yan
Purpose CEO succession is considered to be one of the most important strategic decision-making issues for enterprises, and this issue has a profound impact on the performance of the enterprises. Design/methodology/approach The research sample in this thesis covers all companies listed in Small and Median Size Enterprise Market and Growth Enterprise Market in China from 2008 to 2015. First, univariate analysis is made for CEO turnover and its corresponding previous company performance. The company's performance is measured by the total asset return rate (ROA) and the operating profit asset rate (OROA). Second, in regression analysis, this thesis adopts OLS model and Logist model to study the influence of CEO turnover on future performance. Findings. When the company's early performance is not good, the probability of CEO change increases significantly and the probability of a successor CEO coming from external recruitment increases significantly. The CEO turnover will improve the company's future performance, and after the change, the probability of positive change of company’s performance will also increase. Research limitations/implications This thesis only analyzes the impact of CEO succession characteristics on the change of corporate accounting performance. Whether CEO turnover is an effective governance mechanism cannot be fully proved by a certain class of performance. Moreover, since CEO turnover and other mechanisms of corporate governance cooperate to affect the company's performance, the effectiveness of CEO turnover needs further study. Furthermore, the results of this thesis are based only on the research of Chinese small and gem listed companies. Therefore, the conclusion of this thesis has limitations on Chinese main board listed companies. Practical implications This thesis makes the following contributions to the existing empirical research on the relationship between company performance and CEO turnover. First of all, the empirical research of this thesis is of great significance to the study of CEO turnover and corporate governance in China. The empirical test results of this thesis provide clear evidence for the application of the management capability hypothesis in developing countries.Secondly, this thesis provides the latest empirical evidence for the relationship between CEO turnover and company performance in China. Originality/value This article assumes that for Chinese small and gem listed companies, CEO turnovers will have a positive impact on the company's future performance. In addition, this paper also discusses in detail the impact of CEO succession characteristics on future performance improvement, which provides valuable data support for the corporate governance analysis of listed companies in China. Keywords CEO turnover; properties of CEO succession; firm performance