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CEO Succession and Firm Performance: Evidence from Publicly Listed Malaysian Firms

Author

Listed:
  • Rokiah Ishak

    (School of Accountancy, UUM College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia)

  • Ku Nor Izah Ku Ismail

    (School of Accountancy, UUM College of Business, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia)

  • Shamsul Nahar Abdullah

    (Department of Accounting, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Jalan Gombak, 53100 Kuala Lumpur, Malaysia)

Abstract

This study investigates the impact of CEO succession on the financial performance of publicly listed Malaysian firms. A match-paired t-test and Wilcoxon signed-rank test are used to determine if there is a change in firm performance following CEO succession. The overall results show that performance improves following post-succession. We also find significant improvement in the performance of companies that experienced forced turnovers and subsequently selected outsiders as successors. On the other hand, forced CEO turnovers that are followed by internal successions disrupt firm performance. As CEO successions impact firms’ future performance, the succession planning process should be a priority for firms.

Suggested Citation

  • Rokiah Ishak & Ku Nor Izah Ku Ismail & Shamsul Nahar Abdullah, 2013. "CEO Succession and Firm Performance: Evidence from Publicly Listed Malaysian Firms," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 9(2), pages 29-48.
    • Handle: RePEc:usm:journl:aamjaf00902_29-48
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    Citations

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    Cited by:

    1. Stephen A. Ojeka & Dorcas T. Adetula & Dick O. Mukoro & Oyintinane P. Kpokpo, 2017. "Does Chief Executive Officer Succession Affect Firms Financial Performance in Nigeria?," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 530-535.
    2. Nera Marinda Machdar, 2019. "Does CEO Turnover Affect Stock Market Performance through Company Performance in Indonesian Companies?," International Journal of Applied Economics, Finance and Accounting, Online Academic Press, vol. 4(1), pages 15-21.
    3. Yahya Uthman Abdullahi & Rokiah Ishak & Norfaiezah Sawandi, 2018. "Outsider vs insider: Does firm governance matter?," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(3), pages 689-699, June.
    4. Yahya Uthman Abdullahi & Magajiya Tanko, 2020. "Firm Performance, Corporate Governance Mechanisms and CEO Turnover: Evidence from Nigeria," Applied Finance and Accounting, Redfame publishing, vol. 6(1), pages 66-78, February.

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