The Mediating Role of Financial Reporting Quality in the Relationship Between CEO Power and Carbon Emission Disclosures: Evidence From Vietnamese Companies

Nguyen Vinh Khuong, Vu Tran Trong Tai and Le Huu Tuan Anh

Business Strategy and the Environment, 2025, vol. 34, issue 4, 4048-4071

Abstract: This study investigates the impact of chief executive officer (CEO) power on carbon emission disclosures (CDI) and the mediating role of financial reporting quality (FRQ) in this relationship. We employ the two‐step system generalized method of moments (Sys‐GMM) estimator to examine the relationship between CEO power and CDI and the mediating role of FRQ. We utilize a dataset of Vietnamese listed firms between 2015 and 2022, totalling 494 firm‐year observations. We further perform a battery of robustness tests. We find that CEO power positively influences CDI, indicating that CEOs may enhance transparency to bolster their reputation. However, our results also reveal a negative impact of CEO power on FRQ, supporting the notion that powerful CEOs might prioritize personal interests at the expense of reporting integrity. Additionally, we demonstrate that FRQ mediates the relationship between CEO power and CDI, suggesting that while CEOs promote environmental disclosure' transparency, they may concurrently engage in earnings management practices that diminish FRQ. This research contributes to the literature by providing empirical evidence on the role of CEO power in facilitating both financial and environmental disclosures in an emerging market context. The study highlights the mediating role of FRQ, offering new insights into the governance mechanisms that influence corporate transparency.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:bstrat:v:34:y:2025:i:4:p:4048-4071

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