Corporate performance, internal governance mechanisms and CEO succession : the moderating role of CEO power

Chief Executive Officers (CEOs) are a part of firms' strategic resources. Consequently, CEO succession which refers to CEO turnover and selection is an important issue for any corporation. It is arguably one of the most crucial decisions that a board of directors makes. Most of the studies on CEO succession focused on dispersed ownership that is different from Nigeria concentrated ownership structure. Relying on agency theory as the underpinning theory and supported by resource dependence theory, human capital theory and social networking theory, this study examines the influence of corporate performance and corporate governance mechanisms on CEO succession in Nigerian Public Listed Companies (PLCs). It also examines the moderating role of CEO power over corporate performance, internal corporate governance mechanisms and CEO turnover. The hypotheses of the study were tested using logistic regression for the 72 succession events that occurred in the non-financial PLCs in Nigeria from 2011 to 2015. The findings indicate that accounting-based performance (ROA) is a significant determinant of CEO turnover. Meanwhile, board gender diversity is the most significant board structure elements in the study of CEO succession in Nigerian PLCs. Thus, the appointment of female directors on the board influences the decision to change and replace the CEOs. Furthermore, this study finds that CEO power effectively moderates the relationship between corporate governance mechanisms and CEO turnover. In addition, board religiosity and blockholders have significant influence on the CEO selection choice. Consequently, this study recommends that the Nigerian government should enact a legislation on gender quota to ensure that more female directors are appointed to the boards. This study provides some insights and guidance to the regulators, companies and the academics on the issues of CEO succession in the Nigerian corporate environment.