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Joo, Jeong Hwan
Accounting Lab.
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What Determines the Voluntary Disclosure of CEO Succession Planning?

Author(s)
Ahn, Min KwanJoo, Jeong Hwan
Issued Date
2020-10
DOI
10.24056/kar.2020.05.001
URI
https://scholarworks.unist.ac.kr/handle/201301/49863
Fulltext
https://www.kci.go.kr/kciportal/ci/sereArticleSearch/ciSereArtiView.kci?sereArticleSearchBean.artiId=ART002642645
Citation
Korean Accounting Review, v.45, no.5, pp.115 - 159
Abstract
An established succession planning program for the identification and grooming of its next leader helps maintain the continuity of firm strategy and leadership style, which influences long-term firm performance and viability. Disclosure of succession planning information may alleviate investors’ doubts about whether the firm has a succession planning plan, while it may increase competition for CEO candidates, leading to increases in the cost of securing qualified candidates. This study explores what determines firms’ decisions to provide this disclosure using firms that initiate CEO succession planning disclosure in a given year and their control firms. We find that firms are more likely to initiate the disclosure of CEO succession planning when 1) segment concentration (negatively related to organizational complexity) becomes lower, 2) the board of directors becomes more independent, 3) the CEO has reached the retirement age of 64, 4) the CEO becomes more important relative to other executive officers in the industry labor market, 5) the number of analysts following (reflecting external monitoring) increases, and 6) CEO tenure (reflecting CEO entrenchment) declines. Overall, our findings suggest that the disclosure of CEO succession planning is motivated by investor demand for a smooth transition among top management and enhanced transparency in CEO succession planning.
Publisher
한국회계학회
ISSN
1229-3288

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