CEO turnover, stakeholder management, and dynamics between corporate social responsibility and firm performance

Focusing on the CEO transition period, this paper documents that the variation of CSR is highly associated with the fluctuation of firm performance. Moreover, it is found that the strong association is undermined for the CEO transition period during which ample variations of value relevant firm policies take place. Furthermore, the empirical evidence suggests that CEOs whose predecessors relinquish power involuntarily are more likely to adjust CSR activities for the purpose of optimal stakeholder management. The paper presents a heuristic and parsimonious model to guide the empirical investigation and conducts a system of simultaneous equations to ameliorate the endogenous nexus of firm performance, CEO turnover and CSR adjustment. The results are also robust to a battery of additional checks.