Official Turnover and Corporate ESG Practices: Evidence from China

In recent years, environmental, social, and governance (ESG) have been extensive concerned. However, few studies have focused on the impact of situational factors on corporate ESG practice decisions. Based on this, using 9428 observations of Chinese A-share listed companies from 2009 to 2019, this paper attempts to explore the impact of local official turnover on corporate ESG practices, and analyzes the boundary effects of this impact from three aspects: region, industry, and corporate. Our results suggest that (1) official turnover can lead to changes in economic policies and redistribution of political resources, which can stimulate companies’ “risk aversion motivation” and “development motivation” and thus promote their ESG practices; (2) this effect is more significant in the high degree of government intervention, the high level of industry competition and private corporates. (3) Further test finds that only when the official turnover abnormally and the regional economic development well, official turnover can significantly contribute to corporate ESG. This paper enriches the relevant research on the decision-making scenarios of corporate ESG practices from the macro-institutional perspective.


Introduction
Environmental, social, and governance (ESG) performance is gradually becoming an important basis for external stakeholders, such as banks and institutional investors, to assess the sustainability of corporates. Scholars have also studied the value creation effects of ESG, including reducing corporate operational risk (Broadstock et al. 2021;Albuquerque et al. 2019;Benlemlih et al. 2018) and financing costs (Eliwa et al. 2021), improving corporate performance (Javeed et al 2020;Deng and Cheng 2019) and market value (Borghesi et al 2019;Yu et al 2018). Research on the value effects of corporate ESG is relatively rich, but few studies have focused on the decision logic and scenarios of corporate ESG practices. It is worth noting that although most studies acknowledge the positive contribution of ESG to corporate sustainability, ESG implementation initially requires significant market resources and cannot bring direct economic benefits to the corporate, which may lead to a competitive disadvantage in the market (Brown-Liburd and Zamora 2015). Therefore, corporate ESG decisions need to weigh short-term market competition against long-term sustainability. In this case, situational factors are the key to ESG decision weighing, but there is relatively little research on this, especially the impact of institutional environment on corporate ESG.
Institutional theory emphasizes the influence of the institutional environment on corporate behavior, and holds that institutional change is an important reason for the complexity of the business environment (DiMaggio and Powell 1983). As important shapers of the regional institutional environment, local officials' turnover constitutes a key factor of institutional environment changes (Chan and Feng 2019). Exiting literatures also confirm that official turnover lead to policy disruptions (Lin et al. 2015;Zhong et al. 2019;An et al. 2016) as well as elevated uncertainty in the economic environment Yu and Mai 2020), which leads to elevated corporate systemic risk. Meanwhile, the turnover of official power also implies a change in political ecology (Ni 2019;Chen and Gao 2020) and a reshaping of the legitimacy system (Lu 2021;Dong et al. 2022), leading to a redistribution of political resources and giving corporates the opportunity to seek development. In fact, economic policy is an important external environment for firms, and political resource are the key resource in transition economies, both of which have important implications for firms' strategic decisions. Therefore, this paper argues that the local official turnover may have a significant impact on corporate ESG. Because the environmental uncertainty caused by the official turnover may increase the risk of market-based investment and stimulate the "risk aversion motivation" of corporates, prompting them to pay more attention to the latter when weighing short-term market competition against long-term sustainable development. In addition, the redistribution of political resources can motivate companies to seek "development." The high externality characteristics of ESG are closely related to local environmental protection and livelihood issues that are of greater concern to newly appointed officials, which may make ESG a tool for corporates to seek political resources.
To verify this conjecture, this paper attempts to explore the impact of official turnover on corporate ESG in the Chinese context and analyzes its boundary effects from three aspects: region, industry, and corporate. Among them, at the regional level, local government intervention in the market is the basis for the impact of official turnover on decision-making behavior of corporates. The higher the degree of government intervention, the stronger the influence of official turnover on economic policy (Boubakri et al. 2013), and the higher the marketization benefits can be brought by political resources (Cull et al. 2015). At the industry level, industry competition determines the size of the strategic space available to corporates in the face of official turnover (Flammer 2015). At higher levels of industry competition, corporates need to devote limited resources to respond to competitors' strategies, making it difficult to make substantial strategic adjustments. At the corporate level, the differences of property rights mean the difference of corporate goal orientation and organizational structure (Hu et al. 2021;Tang et al. 2020), which further affects their decision propensity in the face of changes in the policy environment. Based on this, this paper further incorporates government intervention, industry competition, and corporate property rights into the research framework to test their moderating effects on the relationship between official turnover and corporate ESG. The Chinese political system provides an ideal research environment for this paper: First, the turnover of Chinese officials is relatively frequent (Yu et al. 2016). By collecting data of China city official turnover in 2009-2019, this paper finds that the average tenure of mayors and municipal party secretaries is only 2.56 years. The frequent official turnover provides abundant samples for this paper. Second, China implements the local headship management model, where mayors and municipal party secretaries hold some key resources in the market, such as business permits, project bidding, financial and tax subsidies, land use, and policy making. Therefore officials have a strong influence on the local market economy (Li and Zhou 2005;Zhong et al. 2019). Third, the market economy system of China is still in the transition stage. There are some differences among regions and industries (Wang and Luo 2019), which is helpful for this paper to explore the boundary effects of official turnover on corporate ESG from a multi-level perspective.
This study makes contributions from four aspects. First, ESG has received extensive attention from corporates and capital markets in recent years. Existing studies have explored the positive impact of ESG on corporate sustainability (Broadstock et al. 2021;Deng and Cheng 2019;Yu et al. 2018;Kölbel et al. 2017;Nazir et al. 2022). However, few scholars have explored the driving factors of corporate ESG practices. Based on institutional theory, this paper explores and confirms the positive impact of local official turnover on corporate ESG, providing an effective perspective to reveal the external driving factors of corporate ESG practices and enriching the relevant research on decision-making scenarios of corporate ESG practices. In addition, this paper confirms the mechanism of firms' "risk aversion motivation" and "development motivation" in the relationship between local official turnover and corporate ESG practices. This finding not only supports and validates the research on ESG riskaverse effect (Broadstock et al. 2021;Bae et al. 2021;Lööf et al. 2022) and the value-adding effect (Borghesi et al. 2019;Fuente et al. 2022), but also reveals the black box that local official turnover affects corporate ESG, thus helping us to fully understand the decision logic of corporate ESG practices. Second, this paper further expands the research on the impact of local official turnover on micro-firm behavior. Chen and Gao (2020), Lyu et al. (2022) have noted that local official turnover has significant effects on corporate location, R&D activities, and financial investment, but no scholars have discussed the relationship between local official turnover and corporate ESG practices, especially in emerging countries. Using Chinese municipal officials data, this paper confirms that local official turnover leads to economic policy discontinuity and political resource redistribution, thus promoting corporate ESG practices. This finding is helpful to deepen our understanding of the actual economic consequences of local official turnover and provides theoretical implications for local government policy optimization and improvement. Third, this paper constructs a comprehensive framework of moderating effects covering multi-level factors such as regions, industries, and micro-individuals of firms. We use this framework to comprehensively analyze the boundaries of the effects of official turnover on corporate ESG, and provide theoretical support for local governments to optimize the economic impact of local official turnover from a multi-level perspective. Fourth, further research in this paper finds that local official turnover does not affect corporate ESG when economic development level is low and when official turnover is normal. This shows that normal and necessary official turnover can be perceived and predicted by the market and does not lead to significant adjustments in corporate investment strategies. This finding reminds local governments that they can improve the stability of financial markets by stabilizing the tenure of officials and optimizing the turnover system. The remainder of the paper is organized as follows. The second section describes the research framework and the theoretical analysis logic. The third section describes the sample selection process, data sources, variable measurement, and the model construction of this paper. The fourth section shows the results of the empirical study of this paper and makes further tests. The fifth section gives the findings of this paper, and based on this, puts forward policy implications and perspectives for the future.

Official turnover and corporate ESG
Institutional theory emphasizes that the government, as the shaper of the institutional environment, has influence and restraint on the strategic behavior of corporates (DiMaggio and Powell 1983). However, it should be noted that corporates are not completely passive in this process, but have some subjective initiative. To achieve different goals and interests, corporates will make contingency strategic decisions based on the institutional environment (Chan and Feng 2019;Deng and Yuan 2021;Shen et al. 2020). This provides a theoretical framework for exploring the impact of official turnover on corporate ESG.
Under fiscally decentralized governance system of China, local officials (mayors and municipal party secretaries) hold the key power to formulate economic policies within their jurisdictions. Due to the difference in personal experiences and governing philosophies, there is a great heterogeneity in each official's tendencies in policy formulation, which leads to obvious individualism in regional economic policies (Li and Zhou 2005;Zhong et al. 2019). Therefore, when local official turnover, the economic policies in the jurisdiction will also change, and even leading to the disruption of the original policies. At the same time, the Chinese traditional idea holds that:Every new sovereign brings his own courtiers." Therefore, when a new official takes office, a new government team will be formed and corresponding department officials will be replaced, which will lead to the redistribution of political resources (Ni 2019;Chen and Gao 2020;Acemoglu et al. 2005). In summary, official turnover leads to changes in economic policies and the redistribution of political resources. These two changes further induce "risk aversion motivation" and "development motivation," which together impact corporate ESG practices.
On the one hand, the discontinuity or interruption of economic policies caused by official turnover can increase the uncertainty of economic development (Lin et al. 2015;Zhong et al. 2019;An et al. 2016) and improve the systemic risk of the corporate. At this time, increasing ESG investment may become an important means of corporate risk aversion. Specifically, in the face of higher environmental uncertainty, blind investments are likely to lead to significant losses of corporate interests (Liu et al. 2020). In contrast, although ESG cannot bring direct economic benefits to corporates in the short term (Xie et al. 2019;Husted and Sousa-Filho 2019), it is less likely to be exposed to risks caused by environmental changes, and it can even help corporates achieve stable growth in the face of higher environmental uncertainty. First, behaviors with positive externalities, such as environmental protection or social responsibility, can help corporates gain recognition from stakeholders and improve credit worthiness and reputation in the market. Therefore, the "insurance effect" of ESG can be used to mitigate the impact of risk events on corporates (Godfrey et al. 2009). In addition, from the perspective of the capital market, economic uncertainty caused by official turnover may trigger investors' concern about the development status of corporates, exposing the market value of corporates to downside risk (Lins et al. 2017;Julio and Yook 2012). Social responsibility, environmental protection, and corporate governance covered by ESG are important manifestations of corporates meeting stakeholders' expectations. So ESG can convey the information of their good operation and stable development to the outside world through signal transmission mechanisms (He and Jiang 2022;Kao et al. 2018;Borghesi et al. 2019), further maintaining the stability of corporate development. As a result, when faced with official turnover, corporates are motivated by "risk aversion" to focus more on the latter in the weigh between short-term market competition and long-term sustainability, and increase ESG investment.
On the other hand, the change of political ecology caused by official turnover will give corporates the opportunity to obtain political resources, thus stimulating their "development motivation." Political-corporate linkage is one of the most important external linkages for corporates. Especially under the special economic system of China, local governments hold scarce resources in the market and play a key role in the development of corporates, which enables corporates with political linkage to gain a firstmover advantage in the market competition. Existing research finds that, compared with corporates without political linkage, corporates with political linkage have more advantages in obtaining government subsidies, tax incentives, and external financing (Infante and Piazza 2014;Yu et al. 2019;Cull et al. 2015). Therefore, when official turnover leads to the transfer of political power, corporates want to be the first to establish political linkages with succeeding officials. For newly appointed officials, they urgently need environmental protection projects and people's livelihood projects to gain public recognition, which gives corporates the space to help officials build political performance and realize political rent-seeking by increasing ESG investment Yang et al. 2021). Therefore, from the motivation of "development," corporates will actively increase ESG investment when facing official turnover.
Based on the above analysis, this paper proposes the following hypotheses.
H 1 : Other things being equal, official turnover has a significant positive effect on corporate ESG.

Moderating effect of the government intervention
Under the framework of political economy, both the market and the government are important instruments of economic development. The market plays a decisive role in resource allocation. The government complements the market through macro-regulatory instruments and plays a guiding and guaranteeing role. Market and government are organically integrated to jointly influence economic development. However, under the transition economies, the construction of market-oriented system is not perfect, and some cities need to reinforce government intervention to compensate for the market failure, so that some of the power of resource allocation is transferred to the government (Faccio 2006), which may affect the sensitivity of corporates' strategic decisions to the official turnover. Specifically, when the degree of government intervention is high, some functions originally belonging to the market will be replaced by the government, such as the formulation of market trading rules and the dominant power in allocation of scarce resources (Boubakri et al. 2013). Therefore, the official turnover will not only lead to the disruption of economic policy, but also to an adjustment of market rules and a reshaping of the legitimacy system, further increasing the uncertainty of the environment and strengthening the "risk aversion motivation" of corporates. On the other hand, the increase of government intervention will increase the marketization benefits brought by political linkages for corporates, including more favorable policies and more influential government endorsements (Cull et al. 2015), which further enhances incentives of corporates to seek political linkages using ESG. On the contrary, if the degree of government intervention is weak, trading rules, resource allocation, and other functions can be regulated by the market alone (Xin and Pearce 1996;Peng and Luo 2000). At this time, the official turnover is mainly reflected in the change of political system, which has less impact on the economic market. The political linkages bring less benefit to the corporates, leading to a lower impact of official turnover on corporates' strategic decisions.
Based on the above analysis, this paper proposes the following hypothesis.
H 2 : Other things being equal, government intervention plays a positive moderating effect on the relationship between official turnover and corporate ESG.

Moderating effect of the industry competition
The investment decision of cor porates should comprehensively evaluate its external environment, including not only the economic policy environment, but also the industry competition environment. With different levels of industry competition, corporates will face different threats of market competition and have different strategic tendencies when making decisions (Wu et al. 2018;Flammer 2015). When the level of industry competition is high, corporates are more vulnerable to being invaded and threatened by other competitors (Datta et al. 2013;Lee et al. 2018;Flammer 2015), so the product market is more likely to be displaced. To maintain their market position, corporates will try their best to put limited resources into the market competition. Thus, although corporates may reduce their market investments due to the uncertainty of the environment caused by official turnover, they will also reserve some resources to respond to the market strategies of competitors in order to avoid market encroachment, resulting in very limited resource space available for ESG (Hoberg et al. 2014). On the other hand, a higher level of industry competition also enhances the short-sightedness effect of investors. This is because fierce industry competition means that the risk of market displacement increases. And it is difficult for investors to accurately assess the longterm development of corporates. Therefore, they can make investment decisions only by observing its short-term performance (Grullon et al. 2019). In this case, due to the short-term economic benefits of ESG projects being very limited, it is difficult to gain the recognition of investors, which leads to the decrease of marketization benefits of corporate ESG and further reduces investment motivation.
Based on the above analysis, this paper proposes the following hypothesis.
H 3 : Other things being equal, industry competition plays a negative moderating effect on the relationship between official turnover and corporate ESG.

Moderating effect of corporate ownership
State-owned enterprises and private enterprises are different in terms of goal orientation and organizational structure, which leads to the two types of corporates adopting different coping strategies facing local official turnover (Hu et al. 2021;Tang et al. 2020). First, state-owned enterprises (SOEs), as the pillar industries of the country, undertake certain livelihood responsibilities and national policy tasks, including maintaining social and market stability. Therefore, even in the face of policy changes caused by the official turnover, SOEs will not significantly reduce market investments, but may instead increase them appropriately to maintain market stability. The profit-seeking characteristics of private corporates make them have higher risk aversion motivation in the face of environmental uncertainty. They will increase ESG investment to maintain the stability of development. Second, the natural linkage between SOEs and local governments enables them to have innate advantages in policy support and capital market competition (Yu et al. 2021;Zhang et al. 2019), weakening the need of SOEs for political linkage. In contrast, due to the presence of "credit discrimination," private corporates prefer using ESG to gain recognition of capital corporates and political resources Huang and Lei 2021). In addition, it is also important to note that executives of SOEs generally have administrative rank and are considered "quasi-officials" of the local government (Leutert 2018), which gives SOEs advantages in government information acquisition. Therefore, SOEs can learn relevant information about official turnover in advance and make strategic arrangements accordingly. Private companies do not have this advantage and can only make strategic adjustments after official turnover. Therefore, the impact of official turnover on private corporates will be obvious in terms of the difference in information acquisition.
Based on the above analysis, this paper proposes the following hypothesis.
H 4 : Other things being equal, the relationship between official turnover and corporate ESG is more significant in private corporates compared to SOEs.

Data
This paper selects Chinese A-share listed companies from 2009-2019 as the research sample, and processes the sample according to the following criteria: ① removing ST and *ST corporate; ② excluding finance, insurance, securities and social service corporate; ③ excluding corporates that the city where the corporate is located and the city where the controller is located do not match.; ④ eliminating the corporates with missing data of key variables during the observation period. A total of 9428 observations are obtained finally. As for the data sources, the official turnover data is manually compiled by the authors according to official websites of local governments, ESG data is obtained from the WIND database, macro data such as local fiscal expenditures are obtained from the EPS database, and corporate characteristics and financial data are obtained from the CSMAR database.

Dependent variable
In recent years, ESG has become increasingly popular. Various rating agencies evaluated the performance of corporate ESG and published the rating results. This paper adopts the ESG rating published by Sino-securitirs Index to measure the corporate ESG practices. From the perspective of the evaluation system, the Sino-securitirs Index is a three-level index evaluation system that comprehensively considers the global mainstream global ESG system and the basic characteristics of the Chinese market, containing 3 primary evaluation indicators, 14 secondary evaluation indicators, 26 tertiary evaluation indicators and more than 130 underlying data indicators (See Table 1). Therefore, it can comprehensively cover corporate annual reports, social responsibility reports, sustainability reports, news media reports and information published by regulatory authorities. The evaluation system is mainly divided into three aspects:(1) Environment dimension. The environment dimension includes environmental management systems, green management objectives, environmental violations, etc. (2) Social dimension. The social dimension includes many indicators, such as institutional system, health and safety, social contribution, etc. (3) Corporate governance. Corporate governance includes governance structure, business activities, external punishment, etc. Overall, compared with other evaluation institutions, the Sino-securitirs Index provides a more accurate assessment of the ESG performance of companies based on the cultural characteristics of China and the investment characteristics of corporates. In addition, as one of the earliest ESG rating agencies in China, the ESG ratings published by Sino-securitirs Index covers a broader and more comprehensive range, which provides sufficient samples for the empirical study in this paper. The ESG rating is divided into nine grades, from low to high: C, CC, CCC, B, BB, BBB, A, AA, AAA. To facilitate the empirical test, the nine grades from C to AAA are assigned 1 to 9 respectively, that is, when the grade is C, the value is 1, and when the rating is CC, the value is 2, and so on.

Independent variable
In China's political system, mayors and municipal secretaries are the main leaders of cities, and the change of their power leads to changes in the local political ecology and policy environment. Referring to Zhang and Qian (2022), the official turnover is measured by whether the mayor or the municipal secretary of the city where the corporate is located has changed. If at least one mayor or municipal secretary has changed, the value is assigned to 1, otherwise the value is assigned to 0.

Moderating variables
For the degree of government intervention, this paper uses the ratio of local fiscal expenditure to GDP to measure the degree of government intervention. The higher the ratio, the stronger the degree of local government intervention (Xie and Zhang 2020).
As for the level of industry competition, this paper uses the Herfindahl-Hirschman Index (HHI) to measure the level of industry competition (Liu et al. 2020). The higher the HHI index, the weaker the level of industry competition (see Eq. 1, Xi is the main business income of a corporate in the industry, and X is the total main business income of the industry).
As for the corporate ownership, if the corporate belongs to SOEs, the value is 1, otherwise the value is 0.

Control variables
Considering the influence of other corporate characteristics on the empirical results, this paper Violations and illegal events of listed companies and subsidiaries Violations and illegal events of senior shareholders further incorporates corporate size (size), shareholding ratio of controlling shareholders (SCS), liability-to-equity ratio (Lte), price cash flow ratio (PCF), current asset ratio (CAR), cash coverage ratio (CCR), Tobin's q-value (TBQ), return on equity (ROE), and paid-in capital (PIC) into the control variables of this paper. The specific measurements of the main variables are shown in Table 2.
Empirical model To verify the rationality of the deductive reasoning, we have constructed the following empirical model.
In the above models, i denotes individual, t denotes time, ESG is the ESG score of the corporate, Off _turn is the official turnover, Moder is the moderating variable, including government intervention, industry competition, and corporate ownership, Control is the set of control variables, C is the constant term, , , and q are the coefficients of each variable, and Z is the residual. Equation 2 is used to test the main effect of this paper. If 1 is positive and passes the significance test, it is considered that there is a positive relationship between official turnover and corporate ESG. Equation 3 is used to test the moderating effect. If 2 passes the significance test and the sign of 2 is the same as 1 , the moderating variable is considered to have an enhancing effect on the main effect, and if the sign is opposite, the moderating variable is considered to have a weakening effect on the main effect. It is important to note that the HHI is an inverse indicator, so its results are the opposite of the above statement. Table 3 shows the descriptive statistics of the main variables. The mean value of ESG performance is 6.474, the standard deviation is 1.060, and the median value is 6.000. The mean value is close to the median value. The standard deviation Liability-to-equity ratio, ratio of total firm liabilities to total equity PCF Price cash flow ratio, ratio of corporate stock price to cash flow per share CAR Current asset ratio, ratio of current assets to total assets of a corporate CCR Cash coverage ratio, ratio of net cash flow from operating activities to current liabilities of a corporate TQB Tobin's q-value, ratio of market capitalization to total assets of a firm ROE Return on equity, ratio of firm net income to shareholders' equity PIC Paid-in capital, difference between total share capital invested by shareholders and returned investments is relatively small, indicating that corporate ESG shows a normal distribution on the whole. The mean value of the official turnover is 0.331, which indicates that the sample corporates are located in cities with relatively frequent official turnover. This value is relatively close to previous studies. The mean value of government intervention is 0.153, the minimum value is 0.051, the median value is 0.135, and the maximum value is 0.5. The maximum value is nearly ten times the minimum value, indicating that there are significant differences in the degree of government intervention in different regions. The median value is less than the mean value indicating that most regions have a weak degree of government intervention, and only a few regions have a high degree of government intervention. The mean value of industry competition is 0.107, the standard deviation is 0.085, the minimum value is 0.019, the median value is 0.083, and the maximum value is 0.449. The standard deviation is relatively large, which indicates that there are obvious differences in the level of industry competition. Table 4 shows the baseline regression results of this paper. Column (1) reports the regression results of official turnover and corporate ESG. The regression coefficient of Off_turn is 0.046, and it passes the significance level of1%, indicating that there is a significant positive relationship between official turnover and corporate ESG. It shows the official turnover raises the environment uncertainty, and increases the systemic risk faced by corporates, prompting corporates to hedge the risk through ESG. Meanwhile, the official turnover implies the redistribution of political resources, which drives corporates to use ESG for rent-seeking and thus seeking political connections. Column (2) reports the results of the moderating effect of government intervention. The regression coefficient of Off_turn*Gov_inter is 0.364 and passes the significance level of 5%, indicating that the degree of government intervention can exert a positive moderating effect on the relationship between official turnover and corporate ESG. A high degree of government intervention means that the government has a stronger influence on the market. On the one hand, a higher degree of government intervention increases the impact of official turnover on environmental uncertainty and strengthens the risk aversion motivation of corporates by using ESG. On the other hand, a higher degree of government intervention enhances the market value benefits of political connection and further strengthens the development motivation of corporates. Column (3) reports the results of the moderating effect of the level of industry competition. The regression coefficient of Off_turn* HHI is 0.630 and passes the significance level of 1%. As the HHI is an inverse indicator, this result indicates that the level of industry competition can negatively moderate the relationship between official turnover and corporate ESG. A higher level of industry competition increases the possibility that the corporate market will be occupied by competitors, which makes the corporate reserve resources for timely strategic adjustment even in the face of official turnover, thus reducing the resource space available for ESG. Moreover, the high level of industry competition reinforces the short-sightedness of investors, reduces the recognition of ESG in the capital market, and further weakens the motivation of corporates to implement ESG. Column (4) reports the results of the moderating effect of corporate ownership. The regression coefficient of Offturn*State is − 0.090 and passes the significance level of 5%, indicating that corporate ownership has a moderating effect on the relationship between official turnover and corporate ESG. Compared with SOEs, the relationship is more significant in private corporates. SOEs undertake certain social responsibility and national policy tasks, while private corporates are profit-oriented. Therefore, when facing official turnover, the former will avoid a sharp decline in market investment to maintain market stability, while the latter will reduce market investment and increase ESG investment in order to hedge risks. At the same time, the natural political connections between SOEs and the government give them an advantage in accessing internal information of government, which further reduces the impact of official turnover on corporates.

Excluding the sample
As the political center of China, Beijing's political ecology is more complex, so the economic consequences of official turnover may be quite different from those of other cities (Zhang and Qian 2022). Therefore, to avoid the bias caused by such samples on the research results, this paper further excludes the samples whose city is Beijing and conducts the empirical test again. The results are shown in Table 5. Columns (1)-(4) are the results of the main effect, the moderating effect of government intervention, the moderating effect of industr y competition and the moderating effect of corporate ownership, respectively. The results show that H 1 , H 2 , H 3 , and H 4 still hold after excluding the sample whose city is Beijing.

Replacing the dependent variable
Different institutions have different ways of evaluating corporate ESG performance, which may lead to bias in the results of this paper. Therefore, this paper selects the ESG scores of Chinese corporates disclosed by Bloomberg to measure corporate ESG performance for robustness testing. As one of the largest ESG rating agencies in the world, Bloomberg's evaluation method is more comprehensive, focusing on evaluating corporate ESG performance from diversified dimensions. The ESG ratings issued by Bloomberg currently cover more than 10,000 corporates in more than 60 countries. However, since Bloomberg serves many corporates in

Endogenous test
Although our empirical results prove that there is a positive relationship between local official turnover and corporate ESG, we may ignore some unobservable characteristics of officials and corporates, leading to endogeneity problems in our findings. These factors may be observable for corporates but unobservable for us, such as officials' preferences, cultural atmosphere of corporates. Therefore, referring to Coles and Li (2020) and Cornelissen (2008), this paper  (4) is the regression that includes both firm and official fixed effects. Column (5) further includes controls for two-side matching between corporates and officials. In addition, all regressions above include year fixed effects. The empirical results show that there is still a significant positive relationship between official turnover and corporate ESG after accounting for unobservable characteristics of officials and corporates. The variation of R 2 in the regression results can explain the influence of unobservable corporate and official factors on the results. The R 2 of the regression result in column (1) is 0.1175. Adding firm and official fixed effects respectively, the R 2 becomes 0.5241 (column 2) and 0.2568 (column 3). This suggests that most of the improvement from 0.1175 to 0.5620 comes from firm fixed effects. Table 9 presents the covariances between ESG and each of the components, which confirms the above results. We find that official fixed effects and firm fixed effects account for proportions 0.211 and 0.394 of total ESG variation.

Channel testing
This paper further examines the mechanisms of official turnover affecting corporate ESG from the perspective of    "risk aversion motivation" and "development motivation." Table 9 shows the test results. On the one hand, this paper hypothesizes that official turnover can promote ESG performance by stimulating risk aversion motivation" of corporates. If this hypothesis holds, the relationship between official turnover and ESG will be influenced by corporates' risk sensitivity. When corporates' risk sensitivity is low, external environmental changes caused by official turnover will have less impact on corporates, making it difficult to stimulate their "risk aversion motivation," and weakening the impact on corporate ESG behavior. On the contrary, the impact of official turnover on ESG behavior will become stronger when corporate risk sensitivity is high. Based on this, this paper introduces the β coefficient in the capital asset pricing model to measure corporate sensitivity to external risk (Ang et al. 2009) and uses the moderating effects to test the above theoretical hypotheses. Column (1) of Table 9 reports the results of this mechanism test. The regression coefficient of Off_turn* Beta is 0.283, which passes the significance level of 1%. The results indicate that corporate sensitivity to external risks positively contributes to the relationship between official turnover and ESG, confirming the existence of the "risk aversion motivation" mechanism.
On the other hand, this paper hypothesizes that the official turnover contributes to the corporate ESG performance by stimulating "development motivation" of corporates. If this hypothesis holds, corporate growth will have an impact on the relationship between official turnover and corporate ESG. When the corporate growth is high, corporates have a higher willingness and sufficient capital to seek development and use ESG to seek political resources. Conversely, corporates will prioritize resources for strategic adjustment to change the situation of lower growth. Based on this, this paper introduces the growth rate of operating income (Growth) to measure corporate growth and uses the moderating effect model to test the above theoretical hypotheses. Column (2) of Table 10 reports the results. The regression coefficient of Off_turn* Growth is 0.001 and passes the significance level of 5%. The results indicate that corporate growth positively contributes to the relationship between official turnover and corporate ESG, confirming the existence of the "development motivation" mechanism.

Heterogeneity test
Heterogeneity test based on regional economic development level Differences of regional economic development level can lead to differences in corporates' cognition of official turnover, which will affect their strategic decisions. Therefore, this paper tests the heterogeneity of the relationship between official turnover and corporate ESG based on the different economic development levels of the cities where the corporates are located. Specifically, this paper follows the "comparability principle" and groups the corporates according to the economic growth rate of their cities. If the city's economic growth rate is higher than the average of the same type of cities, it is included in the high economic growth rate, otherwise it is included in the low economic growth group. Table 10 shows the results. In the high economic growth group, the regression coefficient of Off_turn is 0.046 and passes the significance level of 10%, indicating that the contribution of official turnover to corporate ESG remains robust in this group. In the low economic growth group, the regression coefficient of Off_turn is 0.046, but it does not pass any level of significance, indicating that official turnover cannot exert a significant effect on corporate ESG in regions with slower economic development.
The reason for this phenomenon is that official turnover can lead to the change of corporates' external environment, and the current environmental condition will affect the corporate assessment of the environmental change trend. Prospect theory emphasizes the important role of reference points in uncertainty decisions. It holds that decision makers will tend to be negative about future uncertain changes when their current perception is good, and positive about the changes when their current perception is poor (Kahneaman and Tversky 1979). Therefore, when the regional economic development level is high, corporates will regard the official turnover as a shock to the current economic environment and consider the future environment will show greater uncertainty. So corporates will reduce market investment and increase ESG investment in order to avoid risks. However, when the regional economic development level is low, corporates may think that official turnover can improve the current economic development level and the economy will show an improvement in the future. So corporates will devote their limited resources to market investing and compete for new development opportunities.

Heterogeneity test based on official turnover normally or abnormally
Official turnover, as an exogenous event shock, affects investment decisions of corporates. But whether this exogenous event is predictable will lead to differences in its impact. Under the Chinese political system, the normal tenure of local officials is 5 years, but most officials may leave accidentally due to some special circumstances (promotion, death, corruption) before reaching 5 years. Normal turnover can be predicted in advance, while unexpected departures are considered unexpected events ). Therefore, this paper further classifies official turnover into official turnover normally and official turnover abnormally according to whether they have been in office for five years or not, and conducts regression tests separately. Table 11 shows the results of the test. When the official turnover is normal, the regression coefficient of Off_turn is − 0.058, but it does not pass any significance test, indicating that if the official turnover is normal, it will not impact the corporate ESG. In contrast, when the official turnover is accidental, the regression coefficient of Off_turn is − 0.068, which passes the significance level of 1%, indicating that if the official turnover is abnormal, it will impact the corporate ESG significantly.
The reason for this phenomenon is that official turnover normally has relatively less impact on corporates compared to official turnover abnormally. First, in terms of the policy environment, official turnover normally can be achieved smoothly by means of early personnel turnover and transfer of power, which reduces the impact on market uncertainty. On the other hand, for corporates, when the official turnover is predictable, corporates can also make strategic adjustments and deployments in advance, further reducing the impact of the official turnover on corporate ESG. On the contrary, if the official turnover is abnormal, corporates will face higher environmental uncertainty and thus avoid the risk by increasing ESG investment. In addition, if the official turnover is abnormal, corporates cannot predict in advance and can only make temporary strategic adjustments, thus leading to a more significant impact of official turnover on corporate ESG.

Research findings
The purpose of this paper is to examine the impact of local official turnover on corporate ESG and the boundary effects in a multilevel context. An empirical analysis of a sample of 9428 observations of Chinese A-share listed corporates over the period 2009-2019 finds that, first, local official turnover can significantly promote corporate ESG practices. This is because, under the Chinese political system, local officials are important shapers of the institutional environment. The change of their power will lead to changes in the economic environment and the redistribution of political resources. ESG can meet the dual motivation of "risk aversion" and "development" in this context, and therefore becomes an important strategic choice for corporates. Second, the relationship between official turnover and corporate ESG is subject to the moderating effect of multiple factors. At the regional level, the degree of government intervention has a positive effect on the relationship between official turnover and corporate ESG. This is because in cities with higher degree of government intervention, local governments have stronger influence on the economic environment, and the market value of political resources is higher, so that official turnover is more likely to stimulate firms' "risk aversion" and "development" motivation, thus promoting their ESG performance. At the industry level, the level of industry competition has a weakening effect on the relationship between official turnover and corporate ESG. This is because fierce industry competition will prompt corporates to put limited resources into the market first. Therefore, when faced with official turnover, they will lack sufficient funds to invest in ESG. From the perspective of corporate ownership, the relationship between official turnover and corporate ESG is more significant in private corporates. This is because in the face of official turnover, SOEs need to take on the policy task of maintaining economic market stability and therefore cannot significantly reduce market investment. On the contrary, under the influence of profit-seeking motivation, private corporates will reduce market investment and increase ESG investment in order to avoid risks and maintain their stable development.

Policy insights
This paper finds that, on the one hand, the local official turnover leads to policy disruptions and increases uncertainty in the economic environment, which encourages corporates to avoid systemic risks by increasing ESG investment. On the other hand, it triggers the change of political ecology and leads to a redistribution of political resources, which induces firms to use ESG to seek political connections. The former will lead to a decrease in product market dynamics, and the latter will trigger vicious competition in the market, both of which are detrimental to sustainable economic development. Therefore, this paper proposes the following recommendations to reduce the impact of official turnover on the market and corporates.
First, the main reason that leads to the significant impact of official turnover on corporates is that officials have too much power and hold scarce resources for market competition. Therefore, government intervention in the market should be reduced. This requires local governments to achieve the transformation to a service-oriented government, playing only a guiding and guaranteeing role in the market competition, not overstepping the boundaries and not taking positions. In addition, the use of official power should be monitored and restricted, and power should be put in a cage. On the one hand, the use of power should be made transparent. Especially for resolutions involving the allocation of key resources, the basis, criteria and results of the resolutions must be open and subject to public scrutiny. On the other hand, it is essential to enhance public participation in policy decisions. In the resolution of some major local economic policies, the government can invite corporates, capital markets and the public to participate and discuss effectively, which not only avoids the situation of "one voice" in the policy resolution, but also helps to improve the policy rationality.
Second, improving the degree of marketization can help corporates to focus on market competition and thus reduce the impact of official turnover on corporates. Therefore, we need to create a relaxed and convenient market access environment and establish a fair and orderly market competition. This can encourage corporates to use market strategies to compete and introduce corporate resources into the market rather than using them for vicious competition. Meanwhile, the government is an important force in the construction of regional marketization, so it needs to be incentivized to promote marketization. The central government should include the degree of regional marketization in the assessment indexes of local officials to increase the motivation of officials to cultivate and reform the market.
Third, compared with SOEs, private corporates are more vulnerable to the impact of official turnover, partly due to their higher sensitivity to the market, and partly due to discrimination against the private corporate in terms of industrial policies and external financing, which forces them to seek political connections for endorsement. Therefore, reducing the dependence of private corporates on political connections may help to reduce the impact of official turnover. Specifically, all industrial policies and investment projects, except for national confidential projects, should be equally open to both SOEs and private corporates, giving both equal opportunities to compete. In terms of external financing, a financing guarantee mechanism should be established for private corporates to ease the "credit discrimination" of the capital market against private corporates.
Fourth, research results show that only official turnover abnormally has a significant impact on corporates. Therefore, the tenure system of officials should be improved. Except for necessary factors such as lawlessness and indiscipline and irresistible factors such as illness and death, the government should guarantee the stability and continuity of officials' tenure as much as possible, reduce non-essential personnel transfers, and maintain sustainable economic development. If official turnover is necessary, drastic adjustments in economic policies should be avoided. For existing projects that are legal and approved, we should ensure their continuous advancement. While for economic policies that need to be suspended, a certain transition period should be given to soften the impact of policy changes on the market.

Research limitations and perspectives for the future
Using 9428 observations of Chinese A-share listed companies from 2009 to 2019, this paper demonstrates that official turnover leads to changes in economic policies and redistribution of political resources, which can stimulate firms' "risk aversion motivation " and "development motivation" and thus promote their ESG practices. This effect is more significant in the high degree of government intervention, the high level of industry competition and private corporates. Further test finds that only when the official turnover abnormally and the regional economic development well, official turnover can significantly contribute to corporate ESG. The results not only enrich the related research on official turnover and ESG, but also provide theoretical guidance for optimizing the economic consequences of official turnover, which has rich theoretical and practical significance. However, there are some shortcomings in this paper, which need to be further explored in future research.
First, our sample is limited to Chinese corporates. Although the Chinese political environment provides some convenience for our research, the results may be applicable only to China. It is doubtful whether they can be generalized to other countries. Therefore, future research can expand the sample to other emerging and developed countries to verify the applicability of the results. It is also possible to compare the differences in the results between different countries to further expand and enrich the research in this area.
Second, we only consider the impact of the turnover of mayors and municipal party secretaries on corporate ESG. In China's political system, mayors and municipal party secretaries are the most important government officials, but this does not mean that only their turnover can influence corporates decisions. In fact, other officials, such as financial officials and environmental protection officials, also have an important influence on local economic development, but this issue has not been discussed in this paper.
Third, we fail to consider the impact of the corporate internal governance structure on the results. Although official turnover is exogenous to corporates, corporates' strategic decisions are endogenous and largely influenced by their internal factors. Therefore, exploring the heterogeneous impact of official turnover on different corporates' ESG practices from an internal corporate perspective helps us further understand the logical relationship between the two. This may also become an important research direction in the future.