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Performance-induced CEO turnover in China

Author

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  • Xie, Linyin
  • Chen, Yifei
  • Leung, Wai Kin
  • Chan, Kam C.

Abstract

Analyzing performance-induced CEO turnover offers insights into the turnover-performance relationship and the effectiveness of corporate governance. Correctly identifying forced CEO turnover is fundamental. Breaking from the predominant subjective approach, this study classifies performance-induced turnover using objective data, focusing on an emerging market. Using Chinese A-share listed firm data, we estimate the probability of performance-induced CEO turnover. Then, we find that the likelihood of performance-induced CEO turnover declines significantly as a firm’s return on assets (ROA) increases. Specifically, when firm performance falls below the fourth ROA decile, most CEO turnovers—both forced and voluntary—are performance-induced. We report that industry conditions have a greater effect than stock market cycles on the forced proportion of performance-induced CEO turnovers. Uncertainty shocks reduce performance-induced turnover, while policy shocks decrease it by weakening market competition. Furthermore, delisting risk increases the likelihood of performance-induced turnover while state-owned enterprises have a lower probability of performance-induced turnover.

Suggested Citation

  • Xie, Linyin & Chen, Yifei & Leung, Wai Kin & Chan, Kam C., 2026. "Performance-induced CEO turnover in China," Journal of Business Research, Elsevier, vol. 204(C).
    • Handle: RePEc:eee:jbrese:v:204:y:2026:i:c:s0148296325006885
    DOI: 10.1016/j.jbusres.2025.115865
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