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Succession without Sustainability? CEO turnover and ESG performance: Evidence from China

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  • Fan, Yubao
  • Guo, Mengmeng
  • Pan, Yukun

Abstract

Existing ESG research predominantly emphasises economic consequences while overlooking organisational determinants. This study investigates how CEO turnover affects ESG performance using a panel of Chinese A-share companies from 2009 to 2022. We find that CEO turnover significantly undermines firms' ESG performance, with stronger effects for forced departures and external successions. The deterioration is concentrated in the social and governance pillars; environmental scores do not decline commensurately, consistent with firms offsetting substantive environmental deterioration through symbolic disclosure and greenwashing. Mechanism evidence indicates that strategic instability ensuing from leadership transitions is a primary driver of these negative outcomes. The adverse effect is amplified when board-chair turnover coincides with CEO changes, creating a temporary governance vacuum, and when management stability is low. By contrast, external supervision and strong internal governance buffer ESG against leadership shocks. This research contributes by identifying CEO turnover as a critical organisational factor influencing ESG performance and demonstrating that leadership instability can significantly impede firms’ sustainability initiatives.

Suggested Citation

  • Fan, Yubao & Guo, Mengmeng & Pan, Yukun, 2026. "Succession without Sustainability? CEO turnover and ESG performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 105(C).
    • Handle: RePEc:eee:reveco:v:105:y:2026:i:c:s1059056025010068
    DOI: 10.1016/j.iref.2025.104843
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    Keywords

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    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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