In the era of new media, chief executive officer (CEO) behavior is critical to the survival and development of a company. This study aims to explore the influence of CEO negative news on corporate risk.
This study, grounded in agenda-setting theory, examines the impact of CEO negative news on corporate risk using a sample of 3,588 Chinese listed companies from 2008 to 2020.
The findings indicate that CEO negative news exacerbates corporate risk. Specifically, such reports result in decreased company reputation, reduced financing channels, increased litigation risks and ultimately lead to greater corporate risk. Further research reveals that the positive effects of CEO negative news on corporate risk are more pronounced in companies facing environmental uncertainty, lower corporate governance levels and higher levels of information asymmetry.
This paper innovatively focuses on the negative news of CEOs and discusses the negative leadership of senior executives. The author matched up a unique data set of negative news about CEOs. This paper demonstrates the relationship between CEO negative news and corporate financial distress and adds antecedent literature on corporate risk.
