The Impact of CEO Change on Enterprise Performance

Abstract

The chief executive officer (CEO) is the enterprise's leader and plays a crucial role in business growth. Thus, the impact of the CEO changeover on the company and the selection of a suitable replacement are equally crucial considerations. This research utilizes data from Shanghai and Shenzhen-listed corporations. Using China's shares from 2010 to 2019 as the primary sample and earnings per share (EPS) as the performance indicator, we examine the influence of CEO turnover and succession sources on the company's performance. This research examines the pertinent literature and concludes that there are numerous elements that influence corporate performance, such as CEO turnover, firm size, debt ratio, etc. Several control variables are selected to develop an econometric model in order to control the influence of other factors affecting independent variables and dependent variables. This paper focuses on empirical analysis, does descriptive statistical analysis and multiple regression analysis, and employs the PSM-DID model for robustness testing in order to investigate the effect of CEO change on firm performance. After accounting for the endogenous or self-selection bias of the control sample, the study indicated that CEO turnover has a detrimental effect on company performance. From the standpoint of succession types, the corporate performance of listed companies with external successors is inferior to that of publicly traded companies with internal successors. On the basis of the above empirical findings, this study makes related recommendations for the current corporate management practice in China.