• CEO Replacement;
  • Corporate Governance;
  • Outside Director;
  • Family-owned Business;
  • Ownership Structure


Can corporate performance be improved by changing the CEO? The answer to this question may vary from country to country or from firm to firm. This study proposes that, generally speaking, firms in countries with a better corporate governance environment or firms with better governing mechanisms are more likely to see improvements in performance after a change in their CEOs than those without this environment or these mechanisms. To test this corporate governance hypothesis, we compared corporate performance and value measures of 155 listed companies in Taiwan that had their CEOs replaced between 1996 and 2002. At the national level, we found that in Taiwan corporate performance did not generally improve by merely replacing the CEO. At the firm level, companies with better corporate governance in terms of ownership structure and board structure were found to have better performance and higher corporate value after changing the CEO, and they were also found to have a better net improvement in performance.