Conformity or differentiation? The role of CEO turnover

• Published in: International review of financial analysis 2024-11, Vol.96, p.103636, Article 103636
• Main Authors: Wang, Yaopeng, Xu, Morong, Al-Shammari, Marwan, Banerjee, Soumendra Nath
• Format: Article
• Language: English
• Subjects: CEO career horizon; CEO compensation structure; CEO turnover; Corporate social responsibility
• ISSN: 1057-5219
• DOI: 10.1016/j.irfa.2024.103636

This study investigates the nexus between CEO turnover and corporate social responsibility (CSR) practices using all US-listed companies as the sample. Considering each company's different fields in the CSR practice, we use conformity and differentiation to quantify the CSR practice. Our generalized difference-in-difference method shows that incoming CEOs can positively impact differentiation and negatively affect conformity. Our empirical evidence further indicates that CEO career horizon and compensation structure are the two potential mechanisms through which CEO turnover affects the CSR practice. Our results provide insightful implications for companies that wish to gain a competitive advantage via the CSR practice. •Explored the effects of CEO turnover on CSR practices in both conformity and differentiation dimensions.•Incoming CEOs can positively impact differentiation strategy and negatively affect conformity strategy of companies.•The findings offer insightful implications for companies that wish to gain a competitive advantage via the CSR practice.•CEO career horizon and compensation structure are the two potential channels.