The purpose of this paper is to explore the research question whether corporate social responsibility (CSR) and gender influence the likelihood of CEO turnover.
The author uses a large sample of firms over a 21-year period from 1992 to 2013 taken from firms cross-listed in the ESG STATS, Execucomp, and Compustat databases. Logistic regression is used to analyze the determinants of both CEO turnover and the gender of the newly hired CEO.
Firms with better social performance have higher rates of CEO turnover, performance notwithstanding. Further, for firms with decreasing financial performance, it is more likely they will replace their CEO if they have strong CSR vs firms with weak CSR records. In addition, as performance deteriorates, male CEOs will have a higher chance of being replaced relative to female CEOs. For female CEOs, other factors besides financial performance are important determinants of the likelihood of a turnover taking place.
This study finds support for the stakeholder theory of CSR and does not support entrenchment theory. It is the first study to look at CSR, CEO turnover, and gender issues concurrently.
For practitioners looking for tangible effects of CSR in the workplace, this paper provides evidence that it does matter in terms of CEO turnover. The findings suggest that CSR is acting as a deterrent to bad behavior on the part of executives in the face of weak financial performance in particular.
This study is the first to look at the impact of CSR on CEO turnover. Importantly, the findings suggest that CSR is not something that a firm decides or thinks about in the “right” financial environment but is rather an omnipresent focus embedded within the mission of the firm.
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