Do non-local CEOs affect environmental, social and governance performance?
ISSN: 0025-1747
Article publication date: 20 June 2023
Issue publication date: 24 July 2023
Abstract
Purpose
Building on the intergroup relations perspective on the social identity theory, the authors examine whether firms' environmental, social and governance (ESG) varies when local firms have non-local CEOs. Additionally, the authors examine which contextual factors may strengthen or weaken the effectiveness of ESG in helping non-local CEOs garner trust, legitimacy and resources support from local stakeholders.
Design/methodology/approach
Pooled OLS regressions, based on unbalanced panel data and controlling for year and industry fixed effects, were estimated using a sample composed of 836 Chinese A-share listed firms that have Bloomberg ESG disclosure scores data from 2006 to 2019.
Findings
Results suggest that companies with non-local CEOs, who are perceived as outgroup members by the local stakeholders, would lead to a higher level of ESG performance to overcome the intergroup bias they face. In addition, results also show that companies with a lower level of previous ESG decoupling and having more slack will mitigate the relationship between non-local CEOs and ESG performance. Conversely, firm visibility at a high level will promote the positive relationship between non-local CEOs and ESG performance.
Originality/value
This study offers theoretical insights that extend the focus of intragroup relation to outgroup identity, by introducing an intergroup relations lens to explore how outgroup (or nonprototypical) leaders utilize ESG to counter intergroup bias they suffer. Moreover, this study also extends current literature focusing on non-local CEOs and ESG performance.
Keywords
Acknowledgements
Funding: This research was supported by the Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin University of China (23XNH110).
Citation
Huang, M., Li, M. and Li, X. (2023), "Do non-local CEOs affect environmental, social and governance performance?", Management Decision, Vol. 61 No. 8, pp. 2354-2373. https://doi.org/10.1108/MD-07-2022-1004
Publisher
:Emerald Publishing Limited
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