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Impact of Chief Executive Officer (CEO) Succession Policy on CEO Turnover Announcement in Malaysia

Author

Listed:
  • Shubasini Sivapregasam

    (Putra Business School, Universiti Putra Malaysia, Jalan UPM, 43400 Serdang, Selangor, Malaysia)

  • Aslam Izah Selamat

    (School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia)

  • Norhuda Abdul Rahim

    (School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia)

  • Junaina Muhammad

    (School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia)

Abstract

This paper presents a fresh perspective on chief executive officer (CEO) turnover, where the impact of CEO turnover on firm value is analysed based on whether the removal is planned or unplanned. A total of 146 announcements for ten years in Malaysia is examined using an event study method. The results indicate that, in general, CEO turnover announcements cause a significant reaction due to changes in the firm’s investment decisions. Specifically, a significant positive impact exists when CEO turnover occurs as planned. In a planned turnover, the negative news of the removal of the CEO is immediately minimised with the positive news of a CEO appointment, indicating the positive impact of establishing a CEO succession plan on firm value. This finding adds new knowledge to the current literature and allows policymakers to examine the establishment of a CEO succession policy.

Suggested Citation

  • Shubasini Sivapregasam & Aslam Izah Selamat & Norhuda Abdul Rahim & Junaina Muhammad, 2020. "Impact of Chief Executive Officer (CEO) Succession Policy on CEO Turnover Announcement in Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 16(1), pages 127-153.
    • Handle: RePEc:usm:journl:aamjaf01601_127-153
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    References listed on IDEAS

    as
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