Abstract: Based on the unbalanced panel data of 118 commercial banks from 2008 to 2019, this paper empirically tests the relationship between the executive turnover and the exposure of non-performing loans. The findings show that the turnover of major executives can rapidly reveal the non-performing loans (NPL) of commercial banks. The succeed executives appointed from the outside are more able to accelerate the exposure of the NPL of commercial banks than those promoted from the inside. The succeed executives with abundant professional experiences are more able to accelerate the exposure of the NPL of commercial banks than those with less professional experiences. The results of the mechanical test show that the executives can accelerate the exposure of NPL through restricting the “time for space” behavior of commercial banks. Further studies find out that that executive turnover can quicken the exposure of NPL is significant mainly in the commercial banks with higher ratio and larger scale of NPL. The executive turnover at the time of larger fluctuation of the performance of commercial banks can effectively quicken the exposure of NPL, while the longer accumulated tenure of outgoing executives have negative impact on the exposure of NPL. Therefore, commercial banks should optimize the selection decisions of the successive executives, improve the relevant mechanism of corporate governance concerning the executive turnovers, and urge commercial banks to fully expose the hidden risks.

Key words: commercial bank, executive turnover, non-performing loans, loan quality