The moderating effect of CEO incentives and ideology in shaping the association between ESG performance and financial success

Maria Cristina Dorobantu () and Sanjay Bissessur ()
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Maria Cristina Dorobantu: University of Amsterdam, Amsterdam, Netherlands
Sanjay Bissessur: University of Amsterdam, Amsterdam, Netherlands

Maandblad Voor Accountancy en Bedrijfseconomie Articles, 2025, vol. 99, issue 2, 109-120

Abstract: Financial incentives and personal ideologies play a pivotal role in shaping firm outcomes. Analyzing data from North American firms between 2010 and 2019, our results show that ESG-aligned compensation is significantly associated with ESG performance, suggesting effective incentive structuring. We also find a positive relationship between improved ESG performance and enhanced financial returns, highlighting the economic benefits of sustainable practices. CEOs with pro-sustainability values can more effectively translate ESG objectives into financial returns. Conversely, the independence of the board of directors shows a limited effect, with firms with more independent boards displaying a slightly higher relationship between ESG performance and financial outcomes.

Keywords: ESG; performance; financial; performance; CEO; compensation; political; ideology; corporate; governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:arh:jmabec:v:99:y:2025:i:2:p:109-120

DOI: 10.5117/mab.99.132901

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