IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v70y2024ics1544612324013977.html
   My bibliography  Save this article

The impact of CEO reputation on ESG performance in varying managerial discretion contexts

Author

Listed:
  • Lin, Shiwei
  • Zhang, Yiru
  • Wang, Yanuo
  • Geng, Haipeng

Abstract

Despite considerable attention being devoted to the antecedents of ESG, existing research has overlooked the pivotal role of CEO reputation in determining a firm's ESG performance. We propose that ESG performance is influenced by reputable CEOs’ impression management motive to maintain their status as celebrity. Utilizing a longitudinal data set of A-share listed firms from 2014 to 2020, we find that firms led by highly reputable CEOs demonstrate superior ESG performance compared to those led by less reputable counterparts, particularly in contexts featured by uncertainty and munificence. Heterogeneity analyses reveal that CEOs with political connections and those in state-owned enterprises (SOEs) are likely to place a higher value on their reputation. Our findings provide valuable insights for firms aiming to enhance ESG performance.

Suggested Citation

  • Lin, Shiwei & Zhang, Yiru & Wang, Yanuo & Geng, Haipeng, 2024. "The impact of CEO reputation on ESG performance in varying managerial discretion contexts," Finance Research Letters, Elsevier, vol. 70(C).
  • Handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013977
    DOI: 10.1016/j.frl.2024.106368
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324013977
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.frl.2024.106368?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Somendra Narayan & Jatinder S. Sidhu & Henk W. Volberda, 2021. "From Attention to Action: The Influence of Cognitive and Ideological Diversity in Top Management Teams on Business Model Innovation," Journal of Management Studies, Wiley Blackwell, vol. 58(8), pages 2082-2110, December.
    2. Wonho Cho & Jiyoon Lee & Jiyoung Park, 2024. "Higher highs and lower lows: investor valuation of ESG and financial performance," Applied Economics Letters, Taylor & Francis Journals, vol. 31(16), pages 1482-1487, September.
    3. Morten Bennedsen & Francisco Pérez‐González & Daniel Wolfenzon, 2020. "Do CEOs Matter? Evidence from Hospitalization Events," Journal of Finance, American Finance Association, vol. 75(4), pages 1877-1911, August.
    4. Qigui Liu & Tianpei Luo & Gary Gang Tian, 2019. "How do political connections cause SOEs and non‐SOEs to make different M&A decisions/performance? Evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2579-2619, December.
    5. Xianghui Meng & Peihua Zhu, 2024. "Females’ social responsibility: the impact of female executives on ESG performance," Applied Economics Letters, Taylor & Francis Journals, vol. 31(14), pages 1292-1297, August.
    6. Ho, Hillbun & Kim, Namwoon & Reza, Sadat, 2022. "CSR and CEO pay: Does CEO reputation matter?," Journal of Business Research, Elsevier, vol. 149(C), pages 1034-1049.
    7. Sun, Rui & Zou, Ganna, 2021. "Political connection, CEO gender, and firm performance," Journal of Corporate Finance, Elsevier, vol. 71(C).
    8. Lee, Gilsoo & Cho, Sam Yul & Arthurs, Jonathan & Lee, Eun Kyung, 2020. "Celebrity CEO, identity threat, and impression management: Impact of celebrity status on corporate social responsibility," Journal of Business Research, Elsevier, vol. 111(C), pages 69-84.
    9. Jana Oehmichen & Sebastian Firk & Michael Wolff & Franz Maybuechen, 2021. "Standing out from the crowd: Dedicated institutional investors and strategy uniqueness," Strategic Management Journal, Wiley Blackwell, vol. 42(6), pages 1083-1108, June.
    10. Colak, Gonul & Korkeamäki, Timo P. & Meyer, Niclas Oskar, 2024. "ESG and CEO turnover around the world," Journal of Corporate Finance, Elsevier, vol. 84(C).
    11. Kim, Kihun & Kim, Tae-Nyun, 2023. "CEO career concerns and ESG investments," Finance Research Letters, Elsevier, vol. 55(PA).
    12. Jian, Ming & Lee, Kin Wai, 2011. "Does CEO reputation matter for capital investments?," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 929-946, September.
    13. Jake G. Messersmith & Jeong-Yeon Lee & James P. Guthrie & Yong-Yeon Ji, 2014. "Turnover at the Top: Executive Team Departures and Firm Performance," Organization Science, INFORMS, vol. 25(3), pages 776-793, June.
    14. Kai Chang & Xiaochang Cheng & Yiran Wang & Qiming Liu & Jie Hu, 2023. "The impacts of ESG performance and digital finance on corporate financing efficiency in China," Applied Economics Letters, Taylor & Francis Journals, vol. 30(4), pages 516-523, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Xiaonan Sun & Javier Cifuentes‐Faura & Yao Xiao & Xiaoqian Liu, 2024. "A good name is rather to be chosen: The impact of CEO reputation incentives on corporate green innovation," Business Strategy and the Environment, Wiley Blackwell, vol. 33(3), pages 2413-2431, March.
    2. Zeng, Xiaoming & Chen, Hao & Yin, Yanzhao & Liu, Youjin, 2024. "CEOs’ financial work experience and firms’ outbound investments," Journal of Multinational Financial Management, Elsevier, vol. 74(C).
    3. Sergio Foldes Guimarães & André Luiz Carvalhal Silva, 2023. "Top management team turnover in Brazil: the role of corporate governance in family-controlled companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 20(3), pages 261-273, September.
    4. Liu, Xiaoqian & Cifuentes-Faura, Javier & Zhao, Shikuan & Wang, Long, 2024. "The impact of government environmental attention on firms’ ESG performance: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    5. Brahma, Sanjukta & Zhang, Jing & Boateng, Agyenim & Nwafor, Chioma, 2023. "Political connection and M&A performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 372-389.
    6. A‐Sung Hong, 2024. "Beyond the finish line: How losing in patent race drives post‐race innovation," Strategic Management Journal, Wiley Blackwell, vol. 45(5), pages 968-993, May.
    7. Miklós Koren & Krisztina Orbán, 2023. "The Macroeconomics of Managers:Supply, Selection, and Competition," CERS-IE WORKING PAPERS 2329, Institute of Economics, Centre for Economic and Regional Studies.
    8. Ting Qian & Caoyuan Yang, 2023. "State-Owned Equity Participation and Corporations’ ESG Performance in China: The Mediating Role of Top Management Incentives," Sustainability, MDPI, vol. 15(15), pages 1-21, July.
    9. Xu, Lei & Ou, Amy Y. & Park, Haemin Dennis & Jiang, Han, 2024. "Breaking barriers or maintaining status quo? Female representation in decision-making group of venture capital firms and the funding of woman-led businesses," Journal of Business Venturing, Elsevier, vol. 39(1).
    10. Haider, Imran & Singh, Harjinder & Sultana, Nigar, 2021. "Managerial ability and accounting conservatism," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(1).
    11. Li, Jingxin & Ye, Yong & Li, Jingxuan, 2024. "Performance feedback and corporate maturity mismatch: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PB).
    12. Jeong, Nara & Kim, Nari & Arthurs, Jonathan D., 2021. "The CEO’s tenure life cycle, corporate social responsibility and the moderating role of the CEO’s political orientation," Journal of Business Research, Elsevier, vol. 137(C), pages 464-474.
    13. Rettl, Daniel A. & Schandlbauer, Alexander & Trandafir, Mircea, 2022. "Employee Health and Firm Performance," IZA Discussion Papers 15147, Institute of Labor Economics (IZA).
    14. Collings, David & Corbet, Shaen & Hou, Yang (Greg) & Hu, Yang & Larkin, Charles & Oxley, Les, 2022. "The effects of negative reputational contagion on international airlines: The case of the Boeing 737-MAX disasters," International Review of Financial Analysis, Elsevier, vol. 80(C).
    15. Lee, Jangwook & Chung, Jiyoon, 2022. "Women in top management teams and their impact on innovation," Technological Forecasting and Social Change, Elsevier, vol. 183(C).
    16. Ying Schwarte & Ping He, 2024. "The effects of institutional investors and munificence on board chair orientations," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 28(4), pages 1049-1077, December.
    17. Dhir, Amandeep & Khan, Sher Jahan & Islam, Nazrul & Ractham, Peter & Meenakshi, N., 2023. "Drivers of sustainable business model innovations. An upper echelon theory perspective," Technological Forecasting and Social Change, Elsevier, vol. 191(C).
    18. Salvi, Antonio & Tron, Alberto & Colantoni, Federico, 2024. "The impact of CEO turnover on firm performance and insolvency risk - A global analysis," Finance Research Letters, Elsevier, vol. 62(PA).
    19. Stephen J. Smulowitz & Didier Cossin & Hongze Lu, 2023. "Managerial Short-Termism and Corporate Social Performance: The Moderating Role of External Monitoring," Journal of Business Ethics, Springer, vol. 188(4), pages 759-778, December.
    20. (Jianqiu) Bai, John & Mkrtchyan, Anahit, 2023. "What do outside CEOs really do? Evidence from plant-level data," Journal of Financial Economics, Elsevier, vol. 147(1), pages 27-48.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:70:y:2024:i:c:s1544612324013977. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.