CEO Characteristics, Family Ownership and Corporate Social Responsibility Reporting: The Case of Saudi Arabia

Abstract

Only a few studies have investigated the association between the characteristics of the chief executive officer (CEO) (i.e., tenure and local or expatriate) and corporate social responsibility (CSR) reporting. Our study adds to the fledgling literature by providing new evidence from Saudi Arabia. Given the dominance of family control among Saudi Arabian listed firms, additionally, this study examined the moderating effect of family ownership on the CEO-CSR relationship. Using CSR scores from Bloomberg database from 2010 to 2019 and ordinary least squares (OLS) regression, the findings reveal that the association between CEO tenure and CSR reporting is positively significant; however, the association between CEO nationality and CSR is not significant. In addition, the findings indicate that family ownership is an important contingency factor that explains the association between CEO tenure and CEO nationality, and CSR reporting. Our study contributes to an emerging line of CSR research that investigates the effects of foreign CEOs on CSR transparency, and supports prior evidence on the benefits to investors of having long-serving CEO and the costs of family entrenchment.

What kind of leaders can promote the disclosure of information on the sustainable development goals?

“…As noted above, this finding suggests that working in a company located in their own country makes CEOs more inclined to disclose information about the SDGs (Hernández et al, 2010). Again, this result confirms those obtained by Al‐Duais et al (2021) and Ren et al (2021). However, in interpreting this finding, it should be borne in mind that most of the CEOs of the companies in the sample are Spanish.…”

“…According to Al‐Duais et al (2021) CEOs may feel morally compelled to contribute to mitigating or solving the social and environmental problems of their hometown, so that local CEOs would encourage social and environmental initiatives. In this regard, Ren et al (2021) showed a positive association between the company's headquarters being located in the CEO's hometown and eco‐innovation.…”

“…There are two alternative views regarding the effect of CEO tenure on CSR (Oh et al, 2018; Villalba‐Ríos et al, 2022). On the one hand, the “human capital view” posits that longer tenured CEOs have more experience and knowledge about the company (Al‐Duais et al, 2021; Oh et al, 2018), which allows them to “see the business case for many types of CSR initiatives” (Manner, 2010, p. 57). Furthermore, tenure makes individuals to feel more connected with their firms and tend to associate their own reputation to that of their firms (Garrido‐Ruso & Aibar‐Guzmán, 2022).…”

“…As a consequence of the globalization of the economy and the internationalization of companies, the presence of foreigners in top management is becoming more and more frequent (Al-Duais et al, 2021).…”

The effect of chief sustainability officers on sustainability reporting—A management perspective

“…Even if the CEO is not directly involved in preparing the financial and sustainability report and its content, this could positively impact sustainability disclosure. This argument is supported by Al‐Duais et al (2021), who find a positive relationship between sustainability disclosure and CEO tenure. Based on the upper echelon theory, Shahab et al (2020) study on how CEO characteristics affect sustainability and environmental performance and reporting.…”