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Chief Executive Officer Succession and Financial Constraints: Evidence from China

Chief Executive Officer Succession and Financial Constraints: Evidence from China This study investigates the impact of Chief Executive Officer (CEO) succession on a firm's financial constraints. Using panel data consisting of CEO turnover and non‐turnover cases of listed companies in China, we find that new CEOs play a significant role in alleviating a firm's financial constraints. Specifically, the level of cash holdings, the investment to cash flow sensitivity, and the cash to cash flow sensitivity all decline following a new CEO's succession. These effects are stronger in cases where the turnovers are forced and the firms are more financially constrained. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Financial Studies Wiley

Chief Executive Officer Succession and Financial Constraints: Evidence from China

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Publisher
Wiley
Copyright
Copyright © 2017 Korean Securities Association
ISSN
2041-9945
eISSN
2041-6156
DOI
10.1111/ajfs.12181
Publisher site
See Article on Publisher Site

Abstract

This study investigates the impact of Chief Executive Officer (CEO) succession on a firm's financial constraints. Using panel data consisting of CEO turnover and non‐turnover cases of listed companies in China, we find that new CEOs play a significant role in alleviating a firm's financial constraints. Specifically, the level of cash holdings, the investment to cash flow sensitivity, and the cash to cash flow sensitivity all decline following a new CEO's succession. These effects are stronger in cases where the turnovers are forced and the firms are more financially constrained.

Journal

Asia-Pacific Journal of Financial Studies – Wiley

Published: Aug 1, 2017

Keywords: ; ; ; ;

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