CEO 교체 형태가 고유변동성과 기업 투자 및 재무 정책에 미치는 영향에 대한 연구

The purpose of this study is to examine any differential impact of CEO turnover according to the types of CEO changes. This study hypothesizes that idiosyncratic risk of stock return at the time of CEO turnover can reflect outside investors’ anxiety about leadership uncertainty with respect to corporate strategy change and new CEO’s ability. In this regard, this study predicts that idiosyncratic risk rises relatively higher surrounding CEO turnover when a new CEO from outside of the firm replaces the incumbent CEO who is forced to leave a company compared to the case that a new CEO from inside of the firm succeeds to a former CEO who steps down voluntarily. In addition, this study hypothesizes that presence of major shareholders including founder’s family in the board of directors can mitigate investor’s anxiety about leadership uncertainty around CEO changes. Each individual CEO turnover is classified into three types: i) whether CEO turnover is voluntary or forced, ii) whether newly appointed CEO is from inside or outside the firm, and iii) whether major shareholder participates in firm management as a member of the board of directors at the time of CEO turnover. Results from an univariate analysis suggest that the type of CEO turnover has a differential impact on idiosyncratic risk surrounding the announcement of CEO changes. First, idiosyncratic volatility is greater about 6% p per annum in case of involuntary resignation compared to voluntary resignation or additional appointment of CEO without resignation surrounding CEO turnover. Investors seem to have both expectation and anxiety about the future course of action new CEO will take to improve the firm performance when a new CEO replaces retiring CEO who is forced to step down. Second, new CEO’s background is also associated with the size of idiosyncratic volatility. When a new CEO comes from inside of the firm, the idiosyncratic volatility is about 7% p per annum lower than when he comes from outside of the firm. This fact supports the CEO ability hypothesis in that investors worry about the new CEO’s leadership since he has no track record about his ability in the firm. Third, presence of major shareholders in the board of directors plays an effective role of reducing investors’ anxiety over the leadership change. When major shareholders including founder’s family members participate actively in firm management, idiosyncratic volatility is about 6% p per annum lower than the case where major shareholders do not involve in firm management as B.O.D. members. Overall, idiosyncratic risk is 12% p per annum greater when CEO turnover is involuntary, and when new CEO comes from outside of the firm, and when major shareholder does not participate directly in firm management, than when CEO turnover is voluntary, and when insider succession is made, and when major shareholder involves in firm management as a director. These results support the strategy and ability hypotheses that predict a higher idiosyncratic volatility when investors have difficulty to forecast a new CEO’s future business policy and capability. This study also attempts to investigate whether a new CEO who is hypothesized to be a risky averter tries to reduce risky investments such as R&D expenses and capital expenditures and to increase cash holdings in an effort to restore organizational stability after CEO changes, and whether the type of CEO turnover is associated with a new CEO’s investment and financial decision. In conclusion, a rise in idiosyncratic volatility surrounding CEO changes does not seem to raise a new CEO’s risk aversion. Rather, R&D expenditures and investment in fixed asset tend to increase whereas corporate cash holdings tend to decrease following CEO turnover. Especially in the firms where their profitability is low, new CEOs seem to try to invest more aggressively in R&D and fixed assets to overcome the current poor business situation. The type of CEO turnover also seems to marginally affect the investment and financial policy following CEO changes. In particular, capital expenditures also tend to increase when founder’s family participates in the firm management as a board member. This result supports the active role of major shareholders monitoring corporate policy at the time of organizational unstability.