Apart from Board of Director, top management, including Chief Executive Officer or Managing Director is alsoudconsidered as an important governance mechanism of the firm. CEO plays a major role in managing and controllingudbusiness operations, thus his/her succession may significantly affect firm performance. This study aims to examineudthe effect of top management succession on share price. Past studies, which used the event-study methodology toudevaluate immediate investors’ reactions towards top management succession had their observations done overudlimited time frame (window periods). Succession may impact the share price beyond the window period because theudinvestors may use information obtained from financial statements to evaluate new top management capabilities. Thisudstudy contributes to the literature by examining the effects of top management succession on share price at the endudof financial years. Book value of equity per share (BE) and earnings per share (EPS) on share price is regressed atudthree different points of time; year of top management change (TMC), a year after top management change (TMC_1)udand post occurrence years of top management change (TMC_C). Findings indicate that BE and EPS are value relevant.udFindings also indicate that top management succession is not significantly related to changes in share price over audshort period of time (transition year and a post transition year). However, over the longer period of time (TMC_C),udour study indicates the top management succession is value relevant. Findings indicate that investors take a longerudtime to appreciate the new top management on their decision makings. Further analysis indicates that BE is regardedudas value relevant by the investors after incorporating firm with outside successor; while EPS is value relevant for theudfirm with inside successor. This study supports the limited studies in Malaysia which indicate succession events haveudan implication on share price. Findings in this study may contribute towards strategic decision making in corporateudmanagement of public listed companies in Malaysia, specifically when board of directors are considering the topudmanagement replacement.
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