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Articles

The aftermath of CEO succession via hierarchical jumps on firm performance and agency cost: Evidence from Chinese firms

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ABSTRACT

This paper analyzes the effect of CEO succession via overall hierarchical jumps on Chinese firm performance and agency cost. It categorizes hierarchical jumps into low, medium and high level. The study reveals through panel regression analysis that the CEOs appointed via medium hierarchical jumps substantially enhance firm performance. Conversely, the successors appointed through low and high hierarchical jumps have relatively no effect on firm profitability. Conclusively, this research evaluates that the aged CEOs should be preferred among the CEOs successors via high hierarchical jumps, which have mitigated the agency problem decisively.

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Acknowledgments

The authors are grateful to the editor and anonymous referee for their helpful comments on an earlier version of the article.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by Natural Science Foundation of China (G0302/71403221) and Sichuan Department of Science and Technology (Grant# 2017ZR0240).

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