This study investigates how effectively a forced CEO turnover mitigates a firm's distress risk amplified by a bad reputation for its Environmental, Social, and Governance (ESG) practices. We find that a firm's CEO dismissal decision significantly reduces the level of its distress risk—measured by Altman's Z-Score—subsequent to negative media coverage of the firm's ESG practices. This suggests that the forced CEO turnover may be taken as an ex-post damage instrument. Additional results show that the mitigation effect of CEO dismissal is stronger in firms under greater market scrutiny conditioned on various mechanisms: market competition, sin stock industry, and analyst coverage.

中文翻译：

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ESG 驱动的人员流动对公司财务风险的影响

本研究调查了强制首席执行官更替如何有效地减轻公司因环境、社会和治理 (ESG) 实践的不良声誉而放大的困境风险。我们发现，在媒体对公司的 ESG 实践进行负面报道后，公司首席执行官的解雇决定显着降低了其困境风险水平（以 Altman 的 Z 分数衡量）。这表明强制CEO更替可能被视为一种事后损害工具。其他结果表明，在受到各种机制（市场竞争、罪恶股票行业和分析师覆盖）更严格市场审查的公司中，首席执行官解雇的缓解效果更强。