CEO SUCCESSION ORIGIN, TYPES AND ITS EFFECT ON PERFORMANCE IN MALAYSIA

Abstract

The purpose of this study is to investigate the effect of CEO succession origin (Internal versus External), types (Voluntary and Force) on firms’ performance. The effect of CEO succession on firms’ performance is investigated using a sample size of 80 firms which consists of 40 firms that had been identified from the list in Bursa Malaysia to have experienced CEO succession and 40 firms that do not experience CEO succession in the year 2014. All financial data and variables are gathered from annual reports and the Emerging Market Information System (EMIS). The findings of this study indicate that CEO origin has no effect on performance. However, the study found a positive association between forced CEO successions on performance. Our finding suggests forced change in the CEOs improve the performance over the lag two years’ period. The appointment of new CEOs via force allows for comprehensive change in the strategy, business operations, and firm’s future growth.