Do CEOs Realize the Negative Impact of Air Pollution? Evidence from Voluntary CEO Turnovers

We examine whether air pollution surrounding corporate headquarters affects CEO turnover. We assume that CEOs tend to have higher quality of life requirements and are more sensitive to air pollution. Using the data of A-share listed companies in China from 2000 to 2019, we empirically find that compared to CEOs experiencing clean air, those exposed to air pollution are more likely to depart and relocate to areas with better air quality. Additionally, these results are more pronounced when CEOs come from relatively less polluted overseas regions and when firms are located in regions with a higher degree of economic development, and they operate in highly competitive industries. These findings expand upon the factors that influence CEO turnover and provide empirical evidence that regional air pollution will bring about the flow of human capital, or even the loss of talents.