Environmental, Social and Governance Performance: Analysis of CEO Power and Corporate Risk

Yan Zhao, Ehsan Elahi (), Zainab Khalid, Xuegang Sun () and Fang Sun
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Yan Zhao: School of Management, Shandong University of Technology, Zibo 255000, China
Ehsan Elahi: School of Economics, Shandong University of Technology (SDUT), Zibo 255049, China
Zainab Khalid: School of Economics and Management, Southeast University, Nanjing 210009, China
Xuegang Sun: School of Economics and Management, Hebei University of Technology, Tianjin 300130, China
Fang Sun: School of Management, Shandong University of Technology, Zibo 255000, China

Sustainability, 2023, vol. 15, issue 2, 1-18

Abstract: This study explores the relationship between a company’s Environmental, Social, and Governance (ESG) performance, and corporate risk. Moreover, the study emphasizes how CEO power moderates this relationship. Using a sample of Chinese A-share listed enterprises from 2011 to 2018, it is found that better ESG performance can reduce firms’ risk. The negative relationship between ESG performance and corporate is stronger for the company with greater CEO power. This link is weaker for state-owned firms and stronger for firms with lower institutional investor holdings. Furthermore, ESG performance mainly affects enterprise risk through three channels: firm reputation, information transparency, and internal control. Generally, firms with better ESG performance are more likely to have sound risk management frameworks. Our findings provide empirical evidence for implementing an ESG information disclosure system and promoting responsible investment in the capital market.

Keywords: environmental performance; governance performance; corporate risk; CEO power; China (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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