Explicating the impact of hierarchical CEO succession on small‐medium enterprises' performance and cash holdings

The objective of the study is to demonstrate the impact of hierarchical CEO succession on small‐medium enterprises (SMEs) performance. A comparison between SOEs and Non‐SOEs have been analysed empirically. In this regard, the data of listed Chinese SMEs have been accumulated for the years 2012–2016. Conclusively, hierarchical CEO succession, hierarchical CEO succession intensity and its three types have been formulated while contemplating the SMEs' profile. Empirical underpinnings witness the positive impact of hierarchical CEO succession and hierarchical CEO succession intensity on state‐owned SMEs performance. Moreover, medium hierarchical CEO successor has been declared to be a promoter of SMEs performance. Hierarchical CEO successor, specifically, medium hierarchical CEO successor mitigate the SMEs cash holdings vehemently. However, earnings management as a moderator invigorates the state‐owned SMEs cash holdings. Remarkably, SME' performance is splendid if it is matured, designates a large percentage of independent directors and attains maximum earnings per share. Significantly, the execution of 2SLS regression indicates the truthfulness of our results.