Purpose While executive integrity is widely regarded as a valuable trait that enhances firm value, a critical puzzle remains: why do many firms still underinvest in executives with high integrity? This study explores this paradox by examining the unintended consequences of executive integrity on corporate risk-taking. Design/methodology/approach Drawing on behavioral consistency theory (which posits cross-domain consistency in individual behavior) and regulatory focus theory (which links high integrity to a prevention focus prioritizing loss avoidance), we argue that executives with high integrity may exhibit risk aversion, leading to a reduction in corporate risk-taking. Our textual measure of executive integrity is derived from machine learning analysis of annual reports of Chinese listed firms (2000–2020), and corporate risk-taking is measured based on return on asset volatility and stock return volatility. The hypothesis is examined using regression analysis, followed by robustness tests. Findings We find that firms led by high-integrity executives demonstrate significantly lower risk-taking. This effect is manifested through conservative corporate policies, including reduced M&A activities, lower leverage, higher liquidity, decreased R&D investment and less risky executive compensation. Furthermore, we find that the risk-taking propensity that executives face in their external environment, chairman tenure and analyst attention decrease, while a harsh environment increases the negative impact of executive integrity on firm risk-taking. Importantly, we show that such reduced risk-taking deviates from optimality: high-integrity executives weaken firms' capital allocation efficiency. Originality/value Our research uncovers a dark side of executive integrity, which offers new insights for corporate governance, particularly in executive selection and risk oversight.