#4577. Corporate performance and CEO dismissal: The role of social category faultlines

August 2026publication date
Proposal available till 19-05-2025
4 total number of authors per manuscript0 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Business, Management and Accounting (all);
Strategy and Management;
Management of Technology and Innovation;
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Abstract:
This study investigates the moderating role of social category faultlines in the relationship between firm performance and CEO dismissal. Using panel data on listed firms covering 20XX to 20XX, we find that the negative relationship between firm performance and the likelihood of CEO dismissal is significantly weaker when boards experience social category faultlines. This study builds on the social identity perspective by providing empirical support for social category faultlines within the context of boards of directors. Social category faultlines lead to identity-based subgroups within the board, which reduce directors identification with the board as a whole, ultimately impacting the boards capability to dismiss a poorly performing CEO. Moreover, our study demonstrates how board contingencies can promote and weaken directors identification with the board, which affects the salience of identity-based subgroups. Our evidence implies that decisions concerning the appointment of directors should be based on criteria that take faultlines and subgroups into account.
Keywords:
board composition; board diversity; CEO dismissal; corporate governance; faultlines

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