The Impact of Political Ties and Power Distance on CEO Dismissal within the Chinese Context

CEO dismissal is one of the most important decisions in that it critically impacts firm performance. According to the theoretical lens of power circulation theory, power determines the rate of CEO dismissal. Drawing on this theory, this study investigates the impact of political ties and power distance on CEO dismissal within the Chinese context. The current article advances existing research and theory by addressing these two underexplored areas, namely, power circulation theory-related factors such as political ties and power distance, as determinants of CEO dismissal within the Chinese context. Our results display that the two power factors, political ties and power distance, are essential determinants of CEO dismissal in China. Specifically, we find that these two factors decrease the likelihood of CEO dismissal in China. This study also finds that local political ties have a more significant impact on CEO dismissal than do central political ties.