Appointments of outsiders as CEOs, state-owned enterprises, and firm performance: Evidence from China

We study CEO successions in China and focus on the decision to appoint outsiders as CEOs. In doing so, we also differentiate our sample into SOEs (state-owned enterprises) and non-SOEs. We find that firm-specific factors can predict external successions for SOEs, but not for non-SOEs. Further, for those SOEs that choose outsiders as CEOs for firm-specific reasons, their subsequent firm performance improves.

► Using China’s experience, we study the decision to appoint outsiders as CEOs.
► Our sample differentiates between SOEs and non-SOEs.
► Firm-specific factors predict external successions at SOEs, but at non-SOEs.
► Firm performance improves for SOEs that choose outsiders as CEOs.