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CEO successor origins, top management team faultline, and strategic change-empirical evidence from China

Ren D 1 , Jiang H 2 , Cheng J 3 , Peng C 4 , Zou Y 5

Affiliations 

  • 1 College of Online and Continuing Education, Sichuan International Studies University, Chongqing, China
  • 2 School of Economics and Business Administration, Chongqing University, Chongqing, China
  • 3 Faculty of Engineering, Architecture and Information Technology, University of Queensland, Brisbane, Australia
  • 4 School of International Finance and Trade, Sichuan International Studies University, Chongqing, China
  • 5 Center for International Business and Economy, Sichuan International Studies University, Chongqing, China
Heliyon, 2023 Sep;9(9):e19200.
PMID: 37662732 DOI: 10.1016/j.heliyon.2023.e19200

Abstract

Building on the upper echelons theory and demographic faultline theory, this paper investigates the role of the top management team (TMT) faultline as a mediator and explores the moderating effect of CEO power as an important contextual factor. We utilize a sample of A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2009 to 2020. Our findings show that outside CEO successors are significantly and positively related to corporate strategic change. TMT faultline mediates the effect of CEO successor origins on corporate strategic change, while CEO power reinforces the relationship between the two. Heterogeneity tests reveal that the effect of outside CEO successors on strategic change is insignificant in state-owned enterprises (SOEs) but has a significant impact on firms at their growth and maturity stages. Furthermore, our findings suggest that outside CEO successors inhibit the positive role of strategic change in promoting firm value.

* Title and MeSH Headings from MEDLINE®/PubMed®, a database of the U.S. National Library of Medicine.

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