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The Effect of CEOs’ Turnover on the Corporate Sustainability Performance of French Firms


This paper examines the relationship between turnover among chief executive officers (CEOs) and corporate sustainability performance (CSP) by identifying the influence of two major types of succession to the top job (internal or external promotion) and the reasons for change. Our model also integrates the firm’s past prioritization of CSP and the impact of a company’s participation in the Global Reporting Initiative (GRI). Upper echelons theory and agency theory frameworks are adopted to understand CSP. Using an analysis of panel data for 88 public companies across 13 years in France, we find that a change of chief executive has a positive and significant effect on CSP 5 years after the change. This positive effect is stronger when the new CEO is recruited from outside the firm. The impact on CSP is invariably positive and significant, except for voluntary departures. The arrival of a new CEO affects CSP less when the firm has already achieved a high standard of CSP and participates in the GRI. These results are obtained after controlling CSP determinants already validated in the literature (financial performance, size, profitability, etc.). The findings show that expectations of CEOs are not solely economic and financial but also concern CSP. In terms of governance, they should prompt shareholders looking to strengthen CSP to choose new CEOs from outside the firm and to encourage the firm to participate in the GRI.

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Fig. 1


  1. 1.

    The 2013 Chief Executive Study, Strategy& (formerly Booz & Company) (

  2. 2.

    The leader is the chairman of the board of directors who has a more important role than the CEO in China.

  3. 3.

    Changes in control (e.g. change of shareholders, mergers and acquisitions, buy-outs) and governance of the board (separation of chairman and chief executive functions); unintentional and negative change (e.g. health problems, financial difficulties, dismissal, legal battles); unintentional and ordinary changes (e.g. retirement, end of mandate); voluntary changes (e.g. personal reasons, resignation).

  4. 4.

    Top Management Teams.

  5. 5.

    Hambrick and Finkelstein (1987) identify three factors determining the degree of managerial discretion.

  6. 6.

    Observatoire de la Responsabilité Sociétale des Entreprises (ORSE) is an association bringing together firms, professional bodies, NGOs and portfolio management companies. It is an intelligence structure on questions affecting corporate social and environmental responsibility, sustainable development and ethical investment.

  7. 7.

    We conducted empirical tests to evaluate the relevance of our model’s specification. We first ran a Fischer test on the nullity of all the parameters. The value of the F test meant the null hypothesis of individual effects could be rejected at the 1 % level. Thus the fixed-effect estimation method was more appropriate than the simple pooled model. We also compared the fixed individual effect with the random effects model by the Hausman test. The fixed effects estimation method proved systematically preferable to the random effect estimation method. The statistical realization of the Hausman test implies rejection of the null hypothesis at the 1 % level, confirming the existence of fixed effects.

  8. 8.

    We de-trended the CSP removing the best straight-line fit from CSP. We made further tests to ensure CSP increased mechanically over time for the sample of firms. We obtained similar results (available on request) to those presented in the manuscript. The new de-trended CSP variable is closely correlated with the CSP variable, the correlation coefficient is about 0.96. The general increase in CSP over time across all companies does not seem to affect our results.

  9. 9.

    Details of results can be provided by the authors on request.



Chief executive officer


Corporate financial performance


Corporate sustainability performance


Corporate social responsibility


Global reporting initiative


Non-governmental organization


Return on assets


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We are grateful to the Vigeo social rating agency for their generosity in providing the ratings they produce. We also thank the three Journal of Business Ethics anonymous reviewers for excellent and highly constructive comments that allowed us to improve our work substantially.


This study was funded by CREGO EA 7317 (Universities of Burgundy & Franche-Comté, France).

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Corresponding author

Correspondence to Yohan Bernard.

Ethics declarations

Ethical Statement

Our manuscript complies to the Ethical Rules applicable for the Journal of Business Ethics.

Conflict of interest

The authors declare that they have no conflict of interest.

Additional information

In our empirical study, the data for the dependant variable were supplied by Vigeo, a French extra-financial rating firm specializing in assessing companies’ CSP. We undertook all necessary steps to guarantee the confidentiality of these data. We did not use these data for business aims.

We are aware of the contents and consent to the use of our names as authors of manuscript entitled “The effect of CEOs’ turnover on the Corporate Sustainability Performance of French firms” that is to be considered for publication in the Journal of Business Ethics. We understand that the staff of the Journal will make every effort to keep such information confidential during the editorial review process. We also understand that if the manuscript is accepted, you will discuss with us the manner in which such information is to be communicated to the reader. We hereby grant permission for any such information, to be included with publication of the manuscript in the Journal of Business Ethics.



Vigeo’s Methodology

Source: Vigeo’s website (

Vigeo’s analysis model relies on three main elements:

  • a frame of reference of precise, opposable and balanced objectives of social responsibility;

  • a questioning segmented into different angles of analysis, all formalized and complementary;

  • a conventional rating scale, organized in a hierarchy of 4 differential score levels.

A Frame of Reference of Precise, Opposable and Balanced Objectives of Social Responsibility

The objectives of social responsibility are represented by 38 criteria coming from 6 different domains.

  • Human Resources Constant improvement of professional and labour relations, as well as of working conditions.

  • Human Rights at Workplaces Respect of trade unions’ freedom and promotion of collective negotiation, non-discrimination and promotion of equality, eradication of banned working practices (Child and enforced labour), prevention of inhumane or humiliating treatments such as sexual harassment, protection of private life and personal data.

  • Environment Protection, safeguard, prevention of attacks on environment, implementation of an adequate managerial strategy, ecodesign, protection of biodiversity and reasonable control of environmental impacts on the overall life cycle of products and services.

  • Business Behaviour Taking into account of clients’ rights and interests, integration of social and environmental standards both in the process of selection of suppliers and in the overall supplying chain, efficient prevention of corruption, and respect of competition laws.

  • Corporate Governance Efficiency and integrity, insurance of both independence and effectiveness of the Board of Directors, effectiveness and efficiency of audit and control systems and in particular inclusion of social responsibility risks, respect of shareholders’ rights and most of all of the minorities, transparency and moderation in executive remuneration.

  • Community Involvement Effectiveness, managerial integration of commitment, contribution to economic and social development of the territories of establishment and their human communities, concrete commitment in favour of the control of societal impacts of products and services, transparent and participative contribution to causes of general interest.

They are evaluated according to 200 principles of action that enable Vigeo to question managerial systems.

Each standard is activated according to its sectorial relevance and is subject to a weighting that shows the relative impact of the social responsibility objectives it refers to.


A Questioning Segmented into Different Angles of Analysis

Vigeo analyses managerial systems on the basis of three “items”. Its questioning is organized into nine elementary analysis angles. These combine the precise questions and observations on the basis of which Vigeo’s analysts and auditor-consultants collect, select and qualify information to express their views.


To set up a criterion’s score, Vigeo consolidates different scores attributed to relevance of policies, coherence of implementation and results.


  • The scores awarded to each angle of approach are reported, by consolidation, to their attached item.

  • The items’ scores are then consolidated at the standard level to produce “standard scores”, which are then all consolidated at the whole field level.

  • Given the heterogeneity of their subjects, domain scores are not consolidated.

A 4-Level Assessment Scale

Our ratings are recorded into a conventional scale organized into four levels of differential scores, whether it is a declaratory SRI questioning or an audit questioning.

Little evidence of commitment Commitment initiated Consolidated commitment Advanced commitment
Poor to very poor guarantee of risk management Poor to moderate guarantee of risk management Reasonable guarantee of risk management Social responsibility objectives actively promoted

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Bernard, Y., Godard, L. & Zouaoui, M. The Effect of CEOs’ Turnover on the Corporate Sustainability Performance of French Firms. J Bus Ethics 150, 1049–1069 (2018).

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  • Corporate sustainability performance (CSP)
  • Turnover
  • CEO
  • GRI
  • Corporate governance