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Do Tournament Incentives Matter for CEOs to Be Environmentally Responsible? Evidence from Chinese Listed Companies

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  • Sajid Ullah

    (School of Economics and Management, Xi’an University of Technology, Xi’an 710048, China)

  • Farman Ullah Khan

    (School of Management, Xi’an Jiaotong University, Xi’an 710049, China)

  • Laura-Mariana Cismaș

    (Faculty of Economics and Business Administration, West University of Timisoara, 300006 Timisoara, Romania)

  • Muhammad Usman

    (School of Accounting, Nanjing Audit University, Nanjing 210017, China)

  • Andra Miculescu

    (Faculty of Economics and Business Administration, West University of Timisoara, 300006 Timisoara, Romania)

Abstract

Relying on tournament theory and environmental management research, we examine how CEO tournament incentives induce top executives to invest more in green innovation. Using a sample of Chinese listed companies from 2010 to 2016, we find evidence that CEO tournament incentives are positively associated with green innovation. In addition, we find that a positive relationship between CEO tournament incentives and green innovation is stronger in state-owned enterprises than in non-state-owned enterprises. These results support tournament theory, which proposes that better incentives induce top executives’ efforts to win the tournament incentives, and such efforts are subject to fiercer competition among employees, which improves firms’ social and financial performance. Moreover, our findings have implications for policy makers and regulators who wish to enhance environmental legitimacy by providing tournament incentives to top executives.

Suggested Citation

  • Sajid Ullah & Farman Ullah Khan & Laura-Mariana Cismaș & Muhammad Usman & Andra Miculescu, 2022. "Do Tournament Incentives Matter for CEOs to Be Environmentally Responsible? Evidence from Chinese Listed Companies," IJERPH, MDPI, vol. 19(1), pages 1-20, January.
    • Handle: RePEc:gam:jijerp:v:19:y:2022:i:1:p:470-:d:716108
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