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Founder CEOs and ESG

Author

Listed:
  • Devos, Erik
  • Feng, Zifeng
  • Thompson, Linh
  • Wei, Zuobao

Abstract

We examine the relation between a firm's environmental, social, and governance (ESG) performance and its CEO's founder status, an important but previously unexplored leadership attribute in this context. We find that founder-CEO-led firms exhibit superior ESG performance. We further document that founder CEOs impact firm ESG behavior through a reputation channel. Specifically, founder CEOs invest significantly more in ESG activities in highly visible firms than non-founder CEOs. Founder CEOs are also particularly mindful of their environmental reputation. On the other hand, in low visibility firms, founder and non-founder CEOs exhibit little differences in the overall ESG activities. The results are robust to controlling for various firm, CEO, and industry characteristics. Using CEO transitions from founder to non-founder status and vice versa, we conduct propensity score matching (PSM) differences-in-differences (DiD) robustness checks. Our baseline results continue to hold.

Suggested Citation

  • Devos, Erik & Feng, Zifeng & Thompson, Linh & Wei, Zuobao, 2024. "Founder CEOs and ESG," International Review of Economics & Finance, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:reveco:v:94:y:2024:i:c:s105905602400399x
    DOI: 10.1016/j.iref.2024.103407
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    More about this item

    Keywords

    Founder CEO; ESG; CSR; Reputation;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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