CEO Tenure,TMT Characteristics and Strategic Change

Abstract

Focusing on the Upper Echelon Theory and using the data of Chinese A-share listed companies from 2007 to 2015 as a sample, this paper theoretically analyzes and empirically tests the impact of CEO tenure on strategic change, as well as the moderating effects of top management team （TMT） tenure, TMT age and TMT education level on the relationship between the above two. The results of this study show that:（1）CEOs are more likely to implement a smaller degree of strategic change as the time of they taking up their current positions prolongs; as CEOs estimate that they will continue to extend their current term of office in the future, they are more likely to implement a greater degree of strategic change. （2）When TMT tenure is longer, CEOs are more likely to implement a smaller degree of strategic change in the case of longer actual tenure; CEOs among longer or shorter TMT tenure companies are more likely to implement a smaller degree of strategic change when their expected tenure is shorter, compared to the medium TMT tenure companies. （3）When the TMT is older, CEOs are more likely to implement a smaller degree of strategic change in the case of longer actual tenure, while CEOs are more likely to implement a smaller degree of strategic change in the case of shorter expected tenure. （4）CEOs in the medium TMT education level enterprises are more likely to implement a smaller degree of strategic change in the case of longer actual tenure, as opposed to those with higher and lower education level of the TMT; CEOs in the medium TMT education level enterprises are more likely to implement a smaller degree of strategic change in the case of shorter expected tenure than those with higher and lower education level of the TMT. This paper shows that in order to promote enterprises to implement strategic change to respond to the changing external environment, enterprises should pay attention to the direct effect of CEOs’ actual and expected tenure and the moderating effect of TMT characteristics.