Does CEO power moderate the link between ESG performance and financial performance? A focus on the German two-tier system
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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Does CEO power moderate the link between ESG performance and financial performance? A focus on the German two-tier system. / Velte, Patrick.
in: Management Research Review, Jahrgang 43, Nr. 5, 21.04.2020, S. 497-520.Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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TY - JOUR
T1 - Does CEO power moderate the link between ESG performance and financial performance?
T2 - A focus on the German two-tier system
AU - Velte, Patrick
PY - 2020/4/21
Y1 - 2020/4/21
N2 - Purpose: Based on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial performance is moderated by chief executive officer (CEO) power. Design/methodology/approach: Listed corporations with reference to the German two-tier system (HDAX and SDAX) for the business years 2010-2018 (775 firm-year observations) have been included. Fixed effects panel regression analysis was conducted to analyze the link between ESG performance (in total and its three pillars) and financial performance (ROA), with special reference to the interaction of a CEO power index. Findings: While ESG performance has a positive impact on financial performance, the link is more pronounced by CEO power. Thus, in line with prior research on the one-tier system, CEO incentives can positively contribute to the CSR-business case in the German two-tier system. The results remain constant after conducting several robustness checks. Originality/value: A key contribution to the empirical CSR literature can be stated, as the moderating role of CEO power in the ESG–financial performance link is rather neglected in prior studies. Thus, corporate governance and sustainability should be classified as interactive aspects for the business case of a successful stakeholder management.
AB - Purpose: Based on stakeholder and upper echelons theory, this study aims to analyze whether the link between environmental, social and governance (ESG) performance and financial performance is moderated by chief executive officer (CEO) power. Design/methodology/approach: Listed corporations with reference to the German two-tier system (HDAX and SDAX) for the business years 2010-2018 (775 firm-year observations) have been included. Fixed effects panel regression analysis was conducted to analyze the link between ESG performance (in total and its three pillars) and financial performance (ROA), with special reference to the interaction of a CEO power index. Findings: While ESG performance has a positive impact on financial performance, the link is more pronounced by CEO power. Thus, in line with prior research on the one-tier system, CEO incentives can positively contribute to the CSR-business case in the German two-tier system. The results remain constant after conducting several robustness checks. Originality/value: A key contribution to the empirical CSR literature can be stated, as the moderating role of CEO power in the ESG–financial performance link is rather neglected in prior studies. Thus, corporate governance and sustainability should be classified as interactive aspects for the business case of a successful stakeholder management.
KW - Management studies
KW - Corporate Social Responsibility
KW - ESG performance
KW - financial performance
KW - corporate goverannce
KW - Stakeholder theory
KW - CEO Power
KW - Business ethics and sustainability
UR - http://www.scopus.com/inward/record.url?scp=85074356589&partnerID=8YFLogxK
U2 - 10.1108/MRR-04-2019-0182
DO - 10.1108/MRR-04-2019-0182
M3 - Journal articles
VL - 43
SP - 497
EP - 520
JO - Management Research Review
JF - Management Research Review
SN - 2040-8269
IS - 5
ER -