CEO Succession Choosing Between Family Member or Outsider

Asian Journal of Finance & Accounting 06/2012; 4(2):263-276. DOI: 10.5296/ajfa.v4i2.2355


Studies discussing on having a family chief executive officer (CEO) or outsider to manage
family companies are widely discussed in overseas but little research that actually taking
place in Malaysia. Thus, this study examines the relationship between the choices of family
or outside CEO with company performance. The sample size of this study was 888 family
companies listed on Bursa Malaysia from 2003 to 2007. Interestingly, the findings indicate as
expected that family CEO enhanced company performance greater than outside CEO. Within
the family company, CEO-successor enhanced the firm value greater than the CEO-founder.
More importantly, family companies prefer to have family CEO to manage the company
because of strong family cultures, high sense of family unity and belongings within the

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