Influence Of CEO Turnover On Capital Structure

CEO turnover is regarded as an important corporate governance method by many companies and has an influence on the corporate capital structure and financial policy adjustment to a certain extent.In the meanwhile,CEO turnover constrains the sitting CEO and the successor and reduces probability of using their power to seek their personal interests.In this thesis,the research on CEO turnover,the relationship between CEO power,CEO characteristics and capital structure,and the research of CEO replacement and capital structure is reviewed.Based on the sample of listed Chinese firms during the period from 2006-2014,this thesis investigates the impacts of CEO turnover,forced CEO turnover and voluntary CEO turnover on capital structure adjustment;the impact of power disparity between successor and predecessor on capital structure adjustment-CEO turnover sensitivity.The main empirical results show that CEO turnover has significantly positive impact on capital structure adjustment,which means that CEO turnover will increase firm's leverage.Compared with voluntary turnover,forced CEO turnover has more significantly positive impact on capital structure adjustment.The results also show that the higher the power disparity between successor and predecessor,the more impact of CEO turnover on capital structure adjustment.Compared with the predecessor,the successor with strong power is more likely to increase financial leverage,while the successor with weak power is more likely to decrease financial leverage.CEO turnover has weak impact on capital structure adjustment when the successor power is similar to that of predecessor power.