Founder CEOs and ESG

Erik Devos, Zifeng Feng, Linh Thompson and Zuobao Wei

International Review of Economics & Finance, 2024, vol. 94, issue C

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.

Keywords: Founder CEO; ESG; CSR; Reputation (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:94:y:2024:i:c:s105905602400399x

DOI: 10.1016/j.iref.2024.103407

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