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.
Online Appendix: https://www.sciencedirect.com/science/article/pii/S0929119923001724#s0145
Presentations: Paris Finance Meeting 2020, Paris, France; European FMA Annual Meeting 2021; FMA Annual Meeting 2019, New Orleans, Louisiana, US; 3rd Conference on CSR, Economy and Financial Markets 2019, Düsseldorf, Germany; Nordic Finance Network Summer Workshop 2019, Helsinki, Finland; École Management, Strasbourg, France 2019
Using an international sample of firms, we investigate the career prospects of directors of firms experiencing negative ESG issues. By tracking the same director at the same firm over time, we document a significant drop in seats held at other public firms’ boards following intense negative media coverage of an ESG problem occurring at a given director's focal firm. Losses of seats at other firms are concentrated among executive directors, among directors of firms located in countries with high environmental and social norms, and among directors of firms located in countries with bank-based systems. Nonexecutive directors and directors of firms located in less stakeholder-oriented countries are not penalized for ESG issues by the director labor market.
Online Appendix:
Presentations: Journal of Corporate Finance Special Issue Conference 2017, Hong Kong; FMA Annual Meeting 2017, Boston, Massachusetts, US; Nordic Finance Network Summer Workshop 2018, Lund, Sweden; FMA Annual Meeting 2018, San Diego, California, US
Presentations: FMA Annual Meeting 2022; European FMA Annual Meeting 2023; Copenhagen Business School, Denmark; Journal of Corporate Finance (JCF) Special Issue Conference 2023; Southern University of Denmark; Copenhagen Business School
Presentations: Journal of Corporate Finance (JCF) Special Issue Conference 2023; Nordic Corporate Governance Annual Conference 2024
Presentations:
B. Maury, N. Meyer, and A. Pajuste. Stakeholder-Oriented Governance and Firms' Societal Impact.
Presentations: ECGI Conference, Milano, Italy, 2024; JAAF Annual Conference 2022, Helsinki, Finland; NFF Örebro Annual Conference 2022; Nordic Corporate Governance Annual Conference 2021