A double-edged sword: Interim CEO and corporate social (ir)responsibility activities

Abstract

Employing an interim CEO is one of the key strategies organizations use to address urgent changes in leadership, yet there is a notable lack of attention in existing corporate governance literature regarding their impact on non-market strategic behaviors. In an effort to bridge this gap, our study integrates institutional theory with impression management literature. Based on unbalanced panel data from Chinese non-state-owned listed companies from 2010 to 2019, the study finds that the succession of an interim CEO is associated with a simultaneous reduction in both corporate social responsibility (CSR) and corporate social irresponsibility (CSI) activities. The negative relationship between interim CEO and CSI activities is weaken in the context of high institutional voids. Mechanism analysis reveals that interim CEOs tend to focus more on the present and allocate more attention toward external stakeholder management strategies and low-cost and efficiency strategies. Additional analysis indicates that in the face of negative financial performance aspirations, interim CEOs are more likely to reduce CSR activities. Similarly, when confronted with negative social performance aspirations, interim CEOs tend to decrease CSI activities to a greater extent.