Do Hierarchical Jumps in CEO Succession Invigorate Innovation? Evidence from Chinese Economy

Muddassar Sarfraz, Wang Qun, Syed Ghulam Meran Shah and Zeeshan Fareed
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Wang Qun: Department of Management and HR, Business School, Hohai University, Nanjing 211100, China
Syed Ghulam Meran Shah: School of Business Administration, Southwestern University of Finance and Economics, Chengdu 61130, China
Zeeshan Fareed: School of Finance, Zhongnan University of Economics and Law, Wuhan 430073, China

Sustainability, 2019, vol. 11, issue 7, 1-21

Abstract: The objective of this study is to analyze Chief executive officer (CEO) succession via hierarchical jumps in Chinese listed firms which orientate towards innovative activity. Good corporate governance is a vehicle to attain the competitive advantage which ultimately makes the organizational sustainability undeterred. The current study will test not only low hierarchical jumps but also medium hierarchical jumps in CEO succession. The study will identify the relationship between specific attributes like education, age and the duality of CEO successors via hierarchical jumps with innovation. We have analysed the data of Chinese listed firms on Shenzhen and Shanghai stock exchanges for the years 2012–2016. Significantly, it has been observed that CEO successors via hierarchical jumps orientate towards innovative activity amongst Chinese listed firms. Conclusively, empirical results have unveiled that hierarchical CEO succession escalates the firms’ innovation. It has also been contemplated that not only the low hierarchical jumps but also medium hierarchical jumps in CEO succession invigorate the organizational innovation. Mature firms with a substantial return on assets or earning per share and having less loan burden concentrate on innovative activity decisively. It has been demonstrated that specific attributes like education, age and the duality of hierarchical CEO successors have no relationship with innovation. The study results are robust via confirmation of 2SLS instrumental regression.

Keywords: corporate governance; CEOs Succession; hierarchical jumps; innovation; sustainability; Chinese firms (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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