CEO Succession Type: The Determinants and the Impacts on Firm Performance

Using the data of Taiwanese listed firms between 2002 and 2011, this thesis studies the factors that may affect whether a firm’s new CEO is an internal candidate or is recruited from outside the firm. It also examines whether the succession types of the new and former CEOs will affect firm performance. The empirical results show that younger firms, larger firms, firms with less independent boards, firms with lower systematic risk, and firms whose former CEOs are external candidates are more likely to hire an external CEO. It is also found that a firm’s post-succession stock performance is better if the former CEO is an external candidate, or if both the former and new CEOs are external candidates.