Does CEO power moderate the link between ESG performance and financial performance? A focus on the German two-tier system

Publikation: Beiträge in ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

Standard

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 ZeitschriftenZeitschriftenaufsätzeForschungbegutachtet

Harvard

APA

Vancouver

Bibtex

@article{f939f839e2194e80939774a10a8959d7,
title = "Does CEO power moderate the link between ESG performance and financial performance?: A focus on the German two-tier system",
abstract = "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.",
keywords = "Management studies, Corporate Social Responsibility, ESG performance, financial performance, corporate goverannce, Stakeholder theory, CEO Power, Business ethics and sustainability",
author = "Patrick Velte",
year = "2020",
month = apr,
day = "21",
doi = "10.1108/MRR-04-2019-0182",
language = "English",
volume = "43",
pages = "497--520",
journal = "Management Research Review",
issn = "2040-8269",
publisher = "Emerald Publishing Limited",
number = "5",

}

RIS

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 -

DOI