中国上市公司CEO继任的实证研究(1).doc

Empirical Study of CEO Succession in Chinese Public Traded EnterprisesAbstractAn examination of 172 CEO successions in P. R. China during 2001 reveals that external successions are more likely in firms with poor performance, in firms with low inside director proportion on board, in firms with outside dominant shareholder, and in firms with less internal successor candidates. Dominant shareholder is found to have great influence upon the type of successor chosen, and this result has implications for corporate governance structure not only in Chinese transitional context but also in Western market economies. In addition, predecessors influence upon the type of successor chosen is found to be rather limited.Key Words: executive succession; corporate governance; transitional economyResearch Area：Business and Organization Management中国上市公司CEO继任的实证研究摘要本文通过对于2001年172家中国上市公司的CEO 继任事件的研究，揭示了新任CEO是从企业内部选拔还是从外部空降是与公司的业绩、内部董事占董事会的比例、控股股东的类别和公司内部候选人的充裕程度是显著相关的。本研究发现控股股东对于中国上市公司新任CEO的选拔具有非常显著的影响，这对于探讨转型经济中的企业治理结构是非常有意义的。另外本研究还发现公司前任CEO对于下任的影响并不是非常的显著。本文采用相关分析和logit回归。关键词: 领导更迭、企业治理、转型经济研究领域：工商管理与管理经济学 Empirical Study of CEO Succession in Chinese Public Traded EnterprisesThe importance of chief executive officer successionExecutive succession has long been a focus of organizational research, and much of that research has examined chief executive officer (CEO) succession. This emphasis is understandable, given the widespread belief that an organizations CEO has a substantial impact on its performance (Lauterbach, Vu & Weisberg, 1999) and a belief that the phenomenon of CEO succession is significantly different from personnel replacement at lower hierarchical levels (Rowan, 1983). Of the variety of successor characteristics that could be potentially examined, researchers have singled out previous organizational affiliation as especially critical (Friedman & Olk, 1989; Reinganum, 1985). CEO successor origin refers to whether an incumbent CEO was an employee of the firm he or she leads at the time of appointment (Kesner & Sebora, 1994). Previous studies on CEO succession usually assume that firms operate in a market economy. Studies in a transitional context like China have been very sparse. Economic environment in the transitional economy differ greatly from that of the market economy, but little is known about CEO succession practice in the transitional environment. For example, in China the corporatization process of State-owned Enterprises did not started until 20 years ago, and during that process the government either transferred the ownership of these former state-owned enterprises to the company itself or sold the ownership of the company to other companies. Due to the short history of ownership trading, the ownership of Chinese enterprises was relatively concentrated. Compared with the extremely dispersed corporate ownership structures in Anglo-American context, this kind of ownership structure is expected to have some unique impact upon organizations critical management decision such as CEO successor chosen. For organizational researcher, such a transition offers a unique opportunity to expand Western theory on antecedents that influence CEO succession management.The purpose of this study is to suggest a set of theoretical hypotheses in the source of CEO appointments in the transitional context. Following the past studies, I examined the antecedents of CEO successor origin from the following five perspectives: pre-succession performance, board composition, ownership structure, predecessor influence, and the abundance of internal candidates. But I diverged from previous studies in that I explored the influence of ownership structure through examining the type of dominant shareholders. As stated above, the ownership of Chinese enterprises is rather concentrated, and thus dominant shareholder is expected to have the incentive and ability to influence CEO successor choice. THEORETICAL DEVELOPMENTInside vs. Outside SuccessionPast research examining successor origin has generally concluded that insider succession represents the maintenance of past practice and thus is less disruptive to an organization than does outsider succession (Dalton & Kesner, 1983). Lauterbach and Weisberg (1996) argued that internal successor has developed the existing corporate strategy with incumbent management, and that he or she is more likely to keep on current strategies, corporate culture, and control structure. In contrast, top managers brought from outside the organization are thought to have broader perspectives and a penchant for change. Helmich and Brown (1972) claimed that an external succession could achieve more drastic changes in the company because the external manager is not bind by old policies and implicit contracts within the firm.Firm PerformanceOne variable that has been examined fairly extensively as a potential determinant of insider-outsider CEO succession has been organizational performance. Dalton and Kesner (1985) suggested that successful organizations may be inclined to maintain their current strategy. By contrast, poor performance typically makes organizations more open to change in the status quo (Boeker, 1989), and under such conditions owners and other stakeholders are more likely to urge that changes be made. As stated earlier, inside succession is generally associated with “maintenance strategies ” and outside succession is associated with “organizational change”. Thus, poorly performing companies may well choose outside successors, and organizations with acceptable or better performance may be inclined instead to choose insiders. Empirical evidence is, however, mixed. Friedman and Singh (1989) didnt find any significant relation between past performance and the successors source. The research of Dalton and Kesner (1985) found a non-linear relation: firms with poor or excellent past performance used a relatively high proportion of external succession. The third variation is presented in the research of Boeker and Goodstein (1993), which found that firms in financial distress are more likely to replace management from outside. These conflicting findings provide little guidance for practice, and so I would like to revisit the relationship between pre-succession performance and successor source with the Chinese sample. Hypothesis 1 (H1): Organization that is performing well will be less likely than organization that is performing poorly to choose an external CEO successor.The Composition of Boards of DirectorsBoard of directors, which has the formal authority to hire and fire the top executive, has been proposed to have important influence upon CEO appointment (Boeker & Goodstein, 1993; Shen, 2000). Members of board of directors are commonly classified as either “insiders” or “outsiders”. An insider refers to a full-time officer of the corporation and is normally a CEO, president, or vice president of the firm. An outsider does not serve in a managerial capacity for the company in which he is a director (Dalton & Kesner, 1987). “Board composition ” is ordinarily defined as the proportion of inside directors to total directors (e.g., Boeker & Goodstein, 1993; Baysinger, Kosnik, & Turk, 1991).Previous researcher suggested that there was a relatively higher turnover rate among members of executive staffs when outsider rather than insider was named (Helmich & Brown, 1972). Firedman and Saul (1989) found that newly hired outsiders were more likely to dismiss incumbent managers. In some cases, outside successors even bring a group of managers from their former organizations to help implement changes (Puffer & Weintrop, 1991). Since outside succession entails greater change than inside succession, especially change in the executive ranks, it is more likely to upset prevailing norms and expectations within an organization and be potentially threatening for inside directors who are also in top management positions. Although past studies have examined board composition as an important organization variable, the empirical results are quite mixed. The research of Dalton and Kesner (1985) found no evidence of a significant relation between outside director representation on firm board and the inclination of boards to appoint outsiders to the top management position. But Boeker and Goodstein (1993) found a positive relation between the percentage of outside directors and the likelihood of an outside appointment. Given the inconclusive results of previous studies, I retest the influence of board composition upon CEO successor choice with the Chinese sample.Hypothesis 2 (H2): Organization with high proportion of inside board members will be less likely than that with low proportion of insiders to choose an external CEO successor.Dominant Shareholder TypeDuring the economic transition, Chinese government either transfers the former State-owned Enterprises (SOE) ownership to the company or sells the ownership to other companies and individuals. Thus, the largest stock share of the company is either owned by the company itself (actually controlled by the managers and employees) or the outside entity. Another striking characteristic of Chinese public traded enterprises is that the stock share owned by the largest shareholder is usually far larger than the proportion owned by the second largest shareholder. Liu and Sun (2002) suggested that the largest shareholder of Chinese public traded enterprises is generally the dominant shareholder. In this research, I define the dominant shareholder as the largest stock shareowner of a company. If the company itself or an insider (president or CEO) of the company owned the largest stock share of a company, I label the company as the one with inside dominant shareholder; if other company or institutional investor or other individual who is not an employee of the company owns the largest stock share, I label the company as the one with outside dominant shareholder. No previous studies have investigated the relationship between the characteristics of dominant shareholder and the type of successor chosen.Dominant shareholders are thought to have a great effect on boards decisions because of the power resulting from their significant holdings. Besides, dominant shareholders have incentives to perform an important monitoring role within the firm because their incomes are directly related to the firms performance (Kaplan and Minton, 1994). If dominant shareholders are outsiders, they may advocate significant change in a poorly performing organization. The reason is that outside dominant shareholders may be less constrained by internal interests and that their objective is usually to maximize investment returns. Faced declining performance, outside dominant shareholder may propose external succession because external CEO successors are most closely associated with significant strategic change. Conversely, inside dominant shareholder may have goals other than performance, and they may take into account more other factors such as in-group interest, patronage, and power balance within the firm. Since outside successor may bring uncertainties and threats to insiders interests and job securities, the inside dominant shareholder may tend to support an internal successor.Hypothesis 3 (H3): Organization in which the dominant shareholder is an outsider will be more likely to choose external CEO successors than organization in which the dominant shareholder is an insider.Predecessor InfluenceNumerous researchers have suggested that top management predecessors influence their successors (White, Smith & Barnett, 1997; Reinganum, 1985). Of the varieties of predecessors characteristics, predecessor origin (Boeker & Goodstein, 1993) and predecessor tenure (Frederickson et al., 1988) have been proposed to influence successor origin.The power and influence of a CEO predecessor can vary over time. Fredrickson, Hambrick and Baumrin (1988) suggested that CEO gains power over time as they gain voting control, establish a patriarchal aura, or co-opt the board of directors. Additionally, incumbent leaders may be reluctant to give up their positions (Boeker, 1992). When they stepped down, they also choose successors who are likely to keep on the current strategy, usually someone within the organization whom they already know well (Zajac & Westphal, 1996). The long-tenured predecessor may both have a greater power to influence successor choice and have a greater opportunity to groom their successors from inside their organizations (Boeker & Goodstein, 1993). Therefore, firms in which predecessors have long tenures may be more likely to name inside successors. Hypothesis 4 (H4): Organization with long-tenure predecessor is less likely to choose an external successor than organization with short-tenure predecessor.Previous studies have not extensively examined the relationship between predecessor origin and successor origin. Nelson and Winter (1982) suggested that organizations often follow past practices when faced with non-routine decisions such as the selection of a successor. If a board of directors has most recently chosen an outside successor, it may be likely to do so again. Hypothesis 5: Organization with an external CEO predecessor are more likely to choose an external CEO successor.Abundance of Internal Successor CandidatesThe abundance of internal successor candidates can influence CEO successor choice. One measure that has been extensively examined as the indicator of the abundance of internal candidates is organization size (Lauterbach &Weisberg, 1996; Reinganum, 1985; Dalton & Kesner, 1983). Larger firms have a larger reservoir and constantly develop and train good management prospects within the firm (Lauterbach &Weisberg, 1996). Hence, larger firms are more likely to recruit from the inside. In contrast, smaller firms may not have a suitable internal candidate and may be forced to recruit from the outside.Hypothesis 6: Large organization is less likely to choose an outside successor than small organization.METHODOLOGYSampleThe sample consisted of Chinese public listed companies that experienced CEO succession between January 1, 2001 and December 31, 2001. These are the most recent information available, which help to build my findings on a contemporary broad-based sample of publicly held corporations. The replacement information was first obtained from a computerized search of all the annual reports of those companies, and then a manual research was conducted to confirm these succession events. The state-controlled enterprises were excluded from the current study, due to the consideration that the Chinese Communist Party continues to exert influence on the selection of top managers in such enterprises (Aoki, 2000). According to the criterion used by National Bureau of Statistics of China, firms of which over 50 percent capital stock is owned by government are regarded as State-controlled Enterprises. Thus, firms with more than 50 percent state-owned stock share were excluded from this study. In the spirit of Lauterbach and Weisberg (1996), the following groups were also excluded: 1) lower-rank management changes such as an appointment to a position other than Chief Executive Officer or President; 2) minor management changes such as an appointment of a chairman to an additional top position; 3) managerial changes during periods of merger or restructuring activity in the firm; 4) appointments announced as interim; 5) appointments for which complete data are not available. The final sample consists of 172 appointment events.MeasurementCEO successor origin. The successor origin is, by nature, binary; a successor can only be either an insider or an outsider. Inside successors were defined as individuals who were previously employed within the executive spans of their predecessors; outside succession occurred when the newly appointed CEO was not employed by the firm at the time of the succession (Bommer & Ellstrand, 1996; Boeker & Goodstein, 1993; Dalton & Kessner, 1985; Helmich, 1974, 1975). In this study, the “executive span” included all management personnel of the organization, although virtually all inside successors were high-ranking corporate officers. Insiders were coded 0, and outsiders were coded 1. The successor information was collected from the firms announcement about succession, which typically indicated the successor with a brief description of his background.Performance. In this study, I estimate the presuccession performance as the “excess return” of the firms stock in 200 trading days (approximately 1 year) beginning 220 trading days before the first public announcement of an executive change. Twenty days immediately preceding the announcement were excluded to minimize the chance that the succession events themselves would bias the context measures, which would be the case if investors anticipated events before their first public announcements. Numerous studies have used the excess return of 200 trading days to estimate the pre-succession performance (e.g., Lauterbach & Weisberg, 1996; Lubatkin, Chung, Rogers & Owers, 1989). Excess return data were bought from a financial information company, which makes equivalent data products with the CRSP of U.S. Details on the technical calculation of excess return are provided in Appendix. The procedure employed has previously been used in numerous studies (Lauterbach et al., 1999; Friedman & Singh, 1989; Beatty & Zajac, 1987; Reinganum, 1985).There are at least two reasons for me to choose “excess returns” as performance measurement. First, excess return overcomes the principle criticism of abnormal returns measure and the limitations of accounting-based measures.