This study investigates how effectively a forced CEO turnover mitigates a firm's distress risk
amplified by a bad reputation for its Environmental, Social, and Governance (ESG) practices.
We find that a firm's CEO dismissal decision significantly reduces the level of its distress risk—
measured by Altman's Z-Score—subsequent to negative media coverage of the firm's ESG
practices. This suggests that the forced CEO turnover may be taken as an ex-post damage
instrument. Additional results show that the mitigation effect of CEO dismissal is stronger in …