Are founder-CEOs resilient to crises? The impact of founder-CEO succession on new firm survival

This article explores whether new firms managed by founder-chief executive officers (CEOs) are more likely to survive than those managed by successor-CEOs in times of crisis. Drawing on the concept of ‘resilience’ to adversity, we argue that founder-CEOs increase the likelihood of new firm survival, especially in times of crisis. Using a sample of Japanese firms founded during the 2003–2010 period, we examine the impact of founder-CEO succession on new firm survival. The analysis shows that new firms managed by founder-CEOs are less likely to liquidate than those managed by successor-CEOs, especially during the 2008–2009 financial crisis. This suggests that founder-CEOs are more resilient to crises than successor-CEOs. In contrast, new firms managed by successor-CEOs are more likely to exit via merger than those managed by founder-CEOs, regardless of macroeconomic conditions. These findings are robust after controlling for the endogeneity of CEO succession.

MYTH OR REALITY? UNVEILING THE EFFECTIVENESS OF HIERARCHICAL CEO SUCCESSION ON FIRM PERFORMANCE AND CASH HOLDINGS

The objective of the study is to contemplate the effectiveness of hierarchical CEO succession and hierarchical CEO succession intensity on SOEs & Non-SOEs performance separately. Meanwhile, the impact of hierarchical CEO succession on cash holdings has also been analysed. The authenticated data has been accumulated from CSMAR for the years 2012-2016 contemplating the listed companies (SOE and Non-SOEs separately for performance while overall companies for cash holdings) on Shenzhen and Shanghai stock exchanges. Through categorization of hierarchical CEO succession, it has been signified that middle-level hierarchical CEO succession elevates the SOEs performance. In contrast, middle and high-level hierarchical CEO succession mitigate the cash holdings. Conclusively, earning management as a moderator has been analysed while deducing that hierarchical CEO succession reduces cash holdings despite firms involving earning management activity which is ultimately beneficial for firms’ growth. The empirical results are robust to alternate technique 2SLS instrumental regression that controls for endogeneity.