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

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  • Syed Ghulam Meran Shah
  • Mingfeng Tang
  • Muddassar Sarfraz
  • Zeeshan Fareed

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.

Suggested Citation

  • Syed Ghulam Meran Shah & Mingfeng Tang & Muddassar Sarfraz & Zeeshan Fareed, 2019. "The aftermath of CEO succession via hierarchical jumps on firm performance and agency cost: Evidence from Chinese firms," Applied Economics Letters, Taylor & Francis Journals, vol. 26(21), pages 1744-1748, December.
    • Handle: RePEc:taf:apeclt:v:26:y:2019:i:21:p:1744-1748
    DOI: 10.1080/13504851.2019.1593932
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    Cited by:

    1. Muddassar Sarfraz & Wang Qun & Syed Ghulam Meran Shah & Zeeshan Fareed, 2019. "Do Hierarchical Jumps in CEO Succession Invigorate Innovation? Evidence from Chinese Economy," Sustainability, MDPI, vol. 11(7), pages 1-21, April.
    2. Talat Islam & Saima Ahmad & Ishfaq Ahmed, 2023. "Linking environment specific servant leadership with organizational environmental citizenship behavior: the roles of CSR and attachment anxiety," Review of Managerial Science, Springer, vol. 17(3), pages 855-879, April.
    3. Fareed, Zeeshan & Wang, Nianyong & Shahzad, Farrukh & Meran Shah, Syed Ghulam & Iqbal, Najaf & Zulfiqar, Bushra, 2022. "Does good board governance reduce idiosyncratic risk in emerging markets? Evidence from China," Journal of Multinational Financial Management, Elsevier, vol. 65(C).
    4. Muddassar Sarfraz & Syed G. M. Shah & Zeeshan Fareed & Farrukh Shahzad, 2020. "Demonstrating the interconnection of hierarchical order disturbances in CEO succession with corporate social responsibility and environmental sustainability," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2956-2971, November.
    5. Sha, Yezhou & Shah, Syed Ghulam Meran & Sarfraz, Muddassar, 2023. "Short selling and SME irregular CEO succession: Witnessing the moderating role of earnings management," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 163-173.
    6. Syed Ghulam Meran Shah & Muddassar Sarfraz & Larisa Ivascu, 2021. "Assessing the interrelationship corporate environmental responsibility, innovative strategies, cognitive and hierarchical CEO: A stakeholder theory perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 457-473, January.
    7. Yingkai Tang & Aswad Akram & Lucian‐Ionel Cioca & Syed Ghulam Meran Shah & Muhammad Asim Ali Qureshi, 2021. "Whether an innovation act as a catalytic moderator between corporate social responsibility performance and stated owned and non‐state owned enterprises' performance or not? An evidence from Pakistani ," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(3), pages 1127-1141, May.
    8. Muddassar Sarfraz & Syed Ghulam Meran Shah & Larisa Ivascu & Muhammad Asim Ali Qureshi, 2022. "Explicating the impact of hierarchical CEO succession on small‐medium enterprises' performance and cash holdings," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 2600-2614, April.
    9. Sarfraz Muddassar Zeeshan Fareed Muhammad Ateeq ur Rehman Adnan Maqbool Muhammad Asim Ali Qureshi, 2019. "Whether CEO Succession Via Hierarchical Jumps is Detrimental or Blessing in Disguise? Evidence from Chinese Listed Firms," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 22(2), pages 23-41, November.

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