A Study On The Factors Influencing The Unconventional Replacement Of Listed Companies And The Wealth Effect

With the continuous development of China’s securities market and expanded, in recent years, Chinese listing Corporation emerged a large number of CEO replacement event, its frequent occurrence caused the high attention of social circles. An effective corporate governance mechanism should be able to eliminate poor management of CEO promptly, and the new managers who have more management instead of older. Our national listing Corporation governance mechanism is not perfect, there are many serious agency problems, the process of operation are inefficient, showing a strong management, weak supervision phenomenon. Leading the management power expanded rapidly, so that CEO’s behavior usually deviates from the interests of shareholders.For a long time, the replacement of CEO has been one of the most important decisions made by the board. Dismissed CEO is correct about the company’s past poor performance, the most severe punishment for senior management staff. In China, research on CEO replacement mainly concentrated in two aspects, one is the research on the reason of changing CEO, means which factor will influence the CEO replacement, second one is research the economic consequences after the CEO replacement, means whether it improves the performance of the company and enhance shareholder wealth effect. At present, there are many research results about CEO replacement be able to bring business performance improvement. However, about whether to promote shareholder wealth which means whether produced significant wealth effect research is rarely involved. This paper made a deeply research on this issue, in order to get valuable conclusions.This paper selects from 2007 to 2014, CEO replacement events occurred in Shanghai and Shenzhen A shares of listing Corporation will being the research sample. According to the reasons of CEO replacement from the CSRC disclosure, the type of replacement is broadly divided into two categories, one is conventional replacement, and another one is the unconventional replacement. And with the occurrence of CEO unconventional replacement in China will being the main research sample, the occurrence of CEO regular replacement of the company as reference sample. This paper first research the factors are affecting the effect of listing Corporation executives of unconventional replacement, then by using the method of research event, independent samples T test method to test the listing Corporation CEO nonconventional replacement market will bring significant abnormal profit. Then using multiple linear regression method, respectively, research source of successor, the ownership property, the influence on the cumulative abnormal profit.Through the research, this paper got the following conclusions:(1) CEO unconventional replacement and the performance of the company significantly negative correlation, the worse the performance of the company, more easy to cause the CEO unconventional replacement, poor business performance is the main reasons which cause CEO unconventional replacement.(2) The regular replacement and ownership property, ownership concentration is positively related. Private listing Corporation are more likely to occur CEO unconventional replacement than state-owned listing Corporation; the proportion of the first shareholder is higher, less occur to CEO unconventional replacement; the proportion of senior management shareholding is higher, less occur to unconventional replacement.(3) Based on the whole, the market see the CEO unconventional replacement is the good news, showed positive abnormal profit, significant enhancement of shareholder wealth. Significant positive correlation(4) source of successor, ownership property and market reaction are interrelated. Relative to the internal successors from the company, when a successor from outside the company, the market reaction is better; compared with the state-owned enterprises, unconventional replacement occurred in CEO company for the private enterprise, market reaction is more positive; especially when company CEO unconventional replacement for private enterprise and successor from outside the company, shareholders wealth increased significantly.The results of this research, and provide a theoretical basis and empirical evidence for strengthening the incentive and constraint of the CEO, and provides policy suggestions for completing our national corporate governance mechanism. The existing problems of Chinese listing Corporation governance mechanism, can deepen shareholding reform, further improve the listing Corporation CEO’s appointment and dismissal mechanism, the continuous development of our nation to improve the manager market etc. At the same time, as soon as possible to perfect the mechanism of information disclosure in Chinese securities market, ensure the small and medium shareholders information have right to know, so as to maintain the interests of our shareholders.