The Effect of CEOs’ Turnover on the Corporate Sustainability Performance of French Firms

Abstract

International audienceThis paper examines the relationship between turnover among chief executive officers (CEOs) and corporate sustainability performance (CSP) by identifying the influence of two major types of succession to the top job (internal or external promotion) and the reasons for change. Our model also integrates the firm’s past prioritization of CSP and the impact of a company’s participation in the Global Reporting Initiative (GRI). Upper echelons theory and agency theory frameworks are adopted to understand CSP. Using an analysis of panel data for 88 public companies across 13 years in France, we find that a change of chief executive has a positive and significant effect on CSP five years after the change. This positive effect is stronger when the new CEO is recruited from outside the firm. The impact on CSP is invariably positive and significant, except for voluntary departures. The arrival of a new CEO affects CSP less when the firm has already achieved a high standard of CSP and participates in the GRI. These results are obtained after controlling CSP determinants already validated in the literature (financial performance, size, profitability, etc.).The findings show that expectations of CEOs are not solely economic and financial but also concern CSP. In terms of governance, they should prompt shareholders looking to strengthen CSP to choose new CEOs from outside the firm and to encourage the firm to participate in the GRI

CEOs’ Poverty Experience and Corporate Social Responsibility: Are CEOs Who Have Experienced Poverty More Generous?

“…Much of the previous research involving the upper echelons theory used demographic variables as proxies for executives' subjective beliefs and values to study the effect of these characteristics on corporate strategies and outcomes (Lewis et al, 2014;Yim, 2013). However, scholars have recently begun to explore senior executives' personality traits to explain their CSR decisions and actions, including their education (Lewis et al, 2014;Rego et al, 2017), psychological characteristics (Al-Shammari et al, 2019;Borghesi et al, 2014;McCarthy et al, 2017;Reimer et al, 2018;Tang et al, 2018a), tenure (Bernard et al, 2018;Oh et al, 2018), power (Muttakin et al, 2018;Walls & Berrone, 2017), and ability (Yuan et al, 2019). Given that CSR is largely a discretionary activity (Chin et al, 2013), and that little consensus exists regarding CSR's outcomes (Xu et al, 2015), it is important to explain the substantial heterogeneity in companies' CSR profiles by considering senior executives' personality traits.…”

“…This line of work suggests that diverse CSR actions are a function of macroand organizational-level factors, including stakeholder or institutional pressures, legal mandates, and economic benefits, among others (Becchetti et al, 2020;Hu et al, 2018;Lin et al, 2013;Mohammad & Husted, 2019;Planer-Friedrich & Sahm, 2020;Tang et al, 2018b). While Literature on the upper echelons theory also reveals that firms' CSR is significantly influenced by CEOs' demographic (Lewis et al, 2014) and psychological characteristics (Al-Shammari et al, 2019;Borghesi et al, 2014;McCarthy et al, 2017;Tang et al, 2018a), turnover (Bernard et al, 2018;Oh et al, 2018), power (Muttakin et al, 2018;Walls & Berrone, 2017), ability (Yuan et al, 2019), and education (Rego et al, 2017). These findings notwithstanding, the impact of the CEO's early-life poverty experience on CSR remains understudied compared to other organizational or personal factors.…”

CSR Disclosure: Effects of Political Ties, Executive Turnover and Shareholder Equity. Evidence from China

“…It has been studied in terms of its causal relationships with different antecedents and impacts, for voluntary and involuntary turnover, including but not limited to large outside shareholders, the poor performance of firms, governmental ownership, and incumbent power. Few pieces of research, nevertheless have examined the negative influence of political ties on CSR [17][18][19]. Therefore, empirical insight into the relationship between executive turnover and quality of CSR disclosure for political firms is direly needed.…”

Determinants of Sustainable Performance and Convergence with EU Agenda 2030: The Case of Romanian Forest Enterprises

“…Bernard [56] argues that the performance of corporate CSR policies and actions is corporate sustainability performance (CSP). CSR relies mainly on company direction, policies and actions, while CSP is based on how effective those actions are in terms of…”