ESG and CEO Turnover Around the World

84 Pages Posted: 14 Oct 2020 Last revised: 26 Mar 2024

See all articles by Gonul Colak

Gonul Colak

University of Sussex ; Hanken School of Economics

Timo Korkeamaki

Aalto University - Aalto University School of Business, Department of Finance, Students

Niclas Oskar Meyer

Hanken School of Economics

Date Written: March 22, 2024

Abstract

We investigate whether CEOs around the world are held accountable for stakeholder-related corporate misbehavior. The likelihood of CEO turnover increases significantly when the media coverage of the ESG incidents reaches extreme levels. CEO turnovers occur even in the cases where an incident does not lead to a stock price decline. In such cases, the board likely has a non-pecuniary motive for the turnover. This suggests that such non-pecuniary reputational concerns are an important determinant of CEO turnover decisions around the world, especially when the firm is facing intense public pressure due to stakeholder-related corporate misbehavior. This effect is more pronounced when firms are headquartered in stakeholder-oriented countries like many European countries.

Keywords: CEO Turnover, Environmental, Social, and Governance (ESG), Firm Misbehavior, Legal Origin, Shareholder Value Maximization, Stakeholder Society Approach

JEL Classification: G34, M12, M14, G15

Suggested Citation

Colak, Gonul and Korkeamaki, Timo and Meyer, Niclas Oskar, ESG and CEO Turnover Around the World (March 22, 2024). Journal of Corporate Finance, forthcoming, Available at SSRN: https://ssrn.com/abstract=3710538 or http://dx.doi.org/10.2139/ssrn.3710538

Gonul Colak

University of Sussex ( email )

Jubilee Building
Falmer
Brighton, BN1 9SN
United Kingdom

Hanken School of Economics ( email )

P.O. Box 479
Arkadiankatu 22
FI-00100 Helsinki, 00100
Finland

Timo Korkeamaki

Aalto University - Aalto University School of Business, Department of Finance, Students ( email )

Finland

Niclas Oskar Meyer (Contact Author)

Hanken School of Economics ( email )

PB 479
Arkadiagatan 22
Helsinki, Uusimaa 00100
Finland
+358407573658 (Phone)

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