URBAN LIVEABILITY AND CEO TURNOVER: EVIDENCE FROM CHINESE FIRMS

Abstract

Using data from 2,744 listed non-financial firms located in 273 Chinese cities and municipalities during the period spanning 2003 to 2017, this paper examines the impact of changes in urban liveability on the voluntary turnover of CEOs. Employing the panel probit methodology, we find that enhancements in urban liveability result in a reduction in CEO turnover. Moreover, such enhancements also serve to partially mitigate the performance sensitivity of CEO turnover. In a disaggregated analysis, we find that improvements in urban liveability likewise decrease the likelihood of CEO turnover for foreign-owned firms, companies facing stronger external rivals, and those lacking government industrial policy support. Our work extends existing literature on the factors influencing CEO turnover within the framework of incomplete contract theory. Additionally, this paper offers a policy foundation for urban planners to effectively decrease the CEO turnover rate by enhancing urban liveability.