Template-Type: ReDIF-Article 1.0
Author-Name: Shubasini Sivapregasam
Author-Workplace-Name: Putra Business School, Universiti Putra Malaysia, Jalan UPM, 43400 Serdang, Selangor, Malaysia
Author-Name: Aslam Izah Selamat
Author-Workplace-Name:  School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia
Author-Email: aslamizah@upm.edu.my
Author-Name: Norhuda Abdul Rahim
Author-Workplace-Name:  School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia
Author-Name: Junaina Muhammad
Author-Workplace-Name:  School of Business and Economics, Universiti Putra Malaysia, 43400 Serdang, Selangor, Malaysia
Title: Impact of Chief Executive Officer (CEO) Succession Policy on CEO Turnover Announcement in 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.
Keywords: CEO exit, CEO turnover announcement, CEO succession policy, event study, efficient market hypothesis
Pages: 127-153
Volume: 16
Issue: 1
Year: 2020
File-URL: http://web.usm.my/journal/aamjaf/aamjaf16012020/aamjaf16012020_7.pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf01601_127-153