Balancing risks: The impact of top executive turnover on corporate digital transformation

We investigate how internal uncertainty triggered by top executive turnover (TET) disrupts firms’ digital transformation. We find that firms with frequent TET are less likely to engage in digital transformation. The underlying mechanism is that top executives adjust long- and short-term risk-taking strategies and alter the direction of earnings management, thereby delaying digital transformation. Top management team characteristics, such as gender, financial expertise, and international experience, along with corporate governance arrangements, significantly shape the relationship between TET and firms’ digital transformation. This effect diminishes over time and becomes less pronounced when the analysis is restricted to general manager turnover.