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Outsider vs insider: Does firm governance matter?

Author

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  • Absullahi, Yahya Uthman
  • Ishak, Rokiah
  • Sawandi, Norfaiezah

Abstract

As CEO turnover occurs, the company may select an insider or outsider as a successor. This study attempts to ascertain whether firm performance, female directors, board religiosity and blockholder ownership influence the decision to appoint an internal or external candidate. Results from logistic regression analysis on 72 succession events over a five-year period (2011 to 2015) reveal that firms which are controlled by blockholders and those with females on their boards tend to select an outsider as the successor. Meanwhile, firms that have Muslims on their boards are more likely to select insiders as successors. This study implies that poor firm performance does not necessarily lead to outside CEO selection choice. On the overall, the findings indicate that block holder ownership and gender diversity in the boardroom matter in the Nigerian corporate landscape.

Suggested Citation

  • Absullahi, Yahya Uthman & Ishak, Rokiah & Sawandi, Norfaiezah, 2018. "Outsider vs insider: Does firm governance matter?," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 14(3), June.
    • Handle: RePEc:ags:pdcbeh:287223
    DOI: 10.22004/ag.econ.287223
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    Keywords

    Labor and Human Capital;

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