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<p>Many small and medium-sized enterprises (SMEs) face difficulties in securing successors, and privately held family firms often struggle to initiate CEO transitions internally. In such cases, external leadership is required to drive CEO turnover, addressing governance and operational challenges that hinder corporate growth. These challenges are particularly pronounced in private equity (PE) buyouts, where PE firms acquire significant ownership stakes in target companies and actively implement management restructuring and governance reforms to unlock corporate value. Building on this background, our study investigates the determinants of CEO turnover and post-buyout financial performance in PE-backed companies through empirical analysis in Japan. Specifically, we examine three key themes and test corresponding hypotheses: (1) the role of CEO turnover in enhancing management efficiency, (2) the relationship between deal attributes and CEO turnover, and (3) the impact of CEO turnover on financial performance. Using data from PE-backed and control companies spanning 2005 to 2018, our findings reveal that PE-backed companies with high agency costs are more likely to experience CEO turnover, and deal attributes significantly influence this likelihood. Furthermore, owner-operated family firms demonstrate improved management efficiency and profitability following CEO turnover.</p>

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CEO Turnover and Post-Buyout Performance in Private Equity-Backed Companies: an Empirical Analysis in Japan

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2025年7月17日

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  • Yasutake Iioka,
  • Yuji Yamada

摘要

Many small and medium-sized enterprises (SMEs) face difficulties in securing successors, and privately held family firms often struggle to initiate CEO transitions internally. In such cases, external leadership is required to drive CEO turnover, addressing governance and operational challenges that hinder corporate growth. These challenges are particularly pronounced in private equity (PE) buyouts, where PE firms acquire significant ownership stakes in target companies and actively implement management restructuring and governance reforms to unlock corporate value. Building on this background, our study investigates the determinants of CEO turnover and post-buyout financial performance in PE-backed companies through empirical analysis in Japan. Specifically, we examine three key themes and test corresponding hypotheses: (1) the role of CEO turnover in enhancing management efficiency, (2) the relationship between deal attributes and CEO turnover, and (3) the impact of CEO turnover on financial performance. Using data from PE-backed and control companies spanning 2005 to 2018, our findings reveal that PE-backed companies with high agency costs are more likely to experience CEO turnover, and deal attributes significantly influence this likelihood. Furthermore, owner-operated family firms demonstrate improved management efficiency and profitability following CEO turnover.