Can Social Trust Influence CEO Turnover?

Due to the existence of the first type of agency problem,the principal-agent problem arising from the information asymmetry between the company's stakeholders and agents has been receiving urgent attention.Replacing a poorly performing CEO is one of the corporate governance mechanisms.The regions of the companys are different,and external environmental factors are also different.External factors have certain influence on the behavior of the enterprise.Whether this kind of supervision mechanism is affected by external factors,what kind of market reaction will be triggered by the executive change event,and whether this market reaction is affected by the external environmental factors of the company's region.Differences in the informal institutional environment based on regional trust will have a systemic impact on the region and individuals,and whether there is a certain correlation between this informal system and internal corporate governance,that is,whether there will be a certain sensitivity to executive change performance.The impact of this impact on companies with different property rights,and the impact of trust on the relationship between risktaking and executive change,whether trust affects the market response brought by executive change,these are the the focus of my research.This paper studies the executive oversight mechanism of executive change from the perspective of the informal system of social trust.The results of the study show that social trust has a negative impact on executive change and that social trust reduces the sensitivity of executive change performance.In addition,we find that this effect exists only in private enterprises.And social trust will significantly reduce the sensitivity of private enterprise executives to change performance.The study found that in the short-term after the occurrence of the executive change event,the company will bring a negative cumulative return rate to the company.The cumulative supernormal return rate of the company executives with high social trust in the region is obviously different from the low trust.This cumulative abnormal rate of return difference exists only in private enterprises,and social trust has a positive effect on the cumulative abnormal rate of return.The research in this paper finds that it is of great significance to the employment mechanism of enterprise executives and the construction of modern enterprise system in different regions under different property rights.It also provides reference for the stable development of enterprises and avoids short-sighted behaviors,reminding listed companies,especially private enterprises,to consider carefully when conducting executive changes,and should fully disclose the reasons for executive changes to the capital market.Thus avoiding the market's strong negative reaction to change events.