Abstract

Corporate social irresponsibility (CSI) exposes firms to various risks, often compelling boards to take corrective action. Drawing on signaling theory, this study proposes that CEO dismissal serves as a visible and credible signal of accountability, allowing firms to counteract the negative signals conveyed by CSI. Using a large-scale dataset of S&P 1500 firms from 2004 to 2023, this study examines whether the severity of CSI influences the likelihood of CEO dismissal. The study also assesses whether financial versus non-financial CSI differ in their impact on CEO dismissal and examines how external CSI, which is more visible to stakeholders, and internal CSI, which is less salient, affect the likelihood of CEO dismissal. The research further explores how two key conditions, CEO power and firm performance, shape the likelihood of CEO dismissal in response to CSI. The findings confirm that CSI significantly increases CEO dismissal likelihood, with financial violations showing substantially stronger effects than non-financial violations. Contrary to expectations, internal CSI proves at least as consequential as external CSI. Higher CEO power reduces dismissal risk overall but does not buffer against CSI-related dismissal, while higher firm performance provides only modest protection. These findings contribute to the literature on CSI, CEO turnover, and corporate governance.