CEO Compensation and Firm Performance: The Role of ESG Transparency

Rath, Chetna; Kurniasari, Florentina; Deo, Malabika

doi:10.28992/ijsam.v4i2.225

Cited by 14 publications

(32 citation statements)

References 69 publications

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“…So, the role duality of CEO has no significant effect on CSD for the corporations listed on the sustainability index. This result is conflicting with Shamil et al (2014); Rath et al (2020) who suggest a significant positive effect for CEODU on CSD. Regarding the control variables, the findings that LOGASS, ROA, and DEBT do not affect CSD for the corporations listed on the sustainability index.…”

Section: Variablesmentioning

confidence: 65%

Determinants of Corporate Sustainability Disclosure: The Case of the S&P/EGX ESG Index

Elafify

2021

IJSAM

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The paper investigates the influence of the corporate board and the dissemination of a separate sustainability report on the corporate sustainability disclosure (CSD) level of corporations listed on the Egyptian sustainability index from 2016–2018. This study used the score-weighting scheme assigned by the Egyptian Stock Exchange (EGX) to evaluate, list, and rank companies in terms of their CSD. Empirical results reveal that boards with higher independence and larger size generate a higher CSD score. The results also support the assumption that the issuance of a separate sustainability report boosts the CSD score. The current study provides insights for policymakers and regulators in developing countries, in general, and in Egypt, in particular, regarding the role of corporate board and issuance of a separate sustainability report in promoting CSD. To the best of the researcher’s knowledge, no prior study has discussed the determinants of the level of CSD for corporations listed on the sustainability index in Egypt.

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Section: Variablesmentioning

confidence: 65%

Determinants of Corporate Sustainability Disclosure: The Case of the S&P/EGX ESG Index

Elafify

2021

IJSAM

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“…Similarly, Suttipun (2021) reported a positive correlation between CEO compensation and ESG disclosure. Conversely, Rath et al (2020) discovered that a transparent process of ESG disclosure is associated with a reduction in CEO compensation. Additionally, Al‐Shaer and Zaman (2019) found that the presence of external assurance on environmental reporting positively impacts the inclusion of sustainability clauses in compensation contracts.…”

Section: Slr Resultsmentioning

confidence: 99%

“…In terms of CEO compensation, the studies examined both monetary benefits (Rath et al, 2020) and non-monetary benefits (Deng & Gao, 2013). The environmental performance aspect was investigated using concepts such as sustainability performance (Ahn, 2020), environmental strategies (Fan et al, 2021), environmental innovation (Quan et al, 2021) and environmental responsibility (Zhang, 2017).…”

Section: Methodsmentioning

confidence: 99%

Chief Executive Officer (CEO) and corporate environmental sustainability: A systematic literature review and avenues for future research

Mahran,

Elamer

2023

Bus Strat Env

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Environmental sustainability has gained significant importance for organizations, highlighting the crucial role of business leaders in addressing environmental degradation. However, the connection between chief executive officer (CEO) characteristics and environmental sustainability remains understudied in academic literature. Understanding this relationship is crucial, considering the significance of environmental sustainability in organizational strategies. This paper presents the first systematic literature review (SLR) on this topic, aiming to identify gaps and opportunities for future research. The SLR analysed 139 studies on the CEO–environmental sustainability relationship. The findings indicate a recent increase in research activity, particularly peaking in 2022 and focusing on China and the United States. Most studies employed upper echelons theory and examined the influence of CEO demographic characteristics on environmental performance. However, less attention has been given to CEO psychological traits, such as personality and ethical leadership, and environmental disclosure. Furthermore, qualitative aspects of environmental disclosure, including reporting tone, readability and specificity, have received less attention. The findings offer valuable insights for academics, practitioners and policymakers. Recommendations for future research include exploring the impact of CEO psychological traits and environmental disclosure on a firm's environmental sustainability. Additionally, studying cross‐country and cross‐industry differences in this relationship is encouraged. This study makes a significant contribution to the field by shedding light on the crucial and relevant topic of environmental sustainability and its association with CEO characteristics, providing valuable insights to guide future research and inform decision‐makers.

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“…Accordingly, with the right stimulus, organizational decision-makers can focus on activities that enhance sustainable value creation and, thus, long-term value. The literature has documented the positive link between ESG performance and financial performance (Rath et al , 2020). Increased consumer willingness to bear economic development costs (McWilliams and Siegel, 2001), reputation enhancement (Brammer and Millington, 2005) and contract cost reduction (Jones, 1995) are mechanisms that improve the banks’ performance and that stem from their commitment to achieving SDGs.…”

Section: Literature Review and Research Hypothesesmentioning

confidence: 99%

Mediating effect of ESG performance on executive incentive compensation-financial performance relationship: evidence from MENA banking sector

Ben Ali,

Chouaibi

2023

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Purpose This study aims to investigate whether integrating environmental, social and governance (ESG) practices mediates the relationship between executive incentive compensation and the financial performance of Islamic and conventional banks in the Middle East and North Africa (MENA) region. Design/methodology/approach This study used multiple regression models to analyze the effectiveness of ESG practices as a mediating variable in explaining the relationship between executive incentive compensation and banks’ financial performance between 2015 and 2021. The sample consisted of 57 Islamic and conventional banks operating in the MENA region, and the data were collected from the Thomson Reuters database (Data Stream). Findings This research paper showed the positive and significant mediating effect of the ESG practice on Banks’ financial performance. Thus, banks’ financial and stock market profitability is influenced by ESG information disclosure. This finding shows that taking ESG into account improves the relationship between executive incentive compensation and banks’ financial performance. Practical implications The results may interest academic researchers, regulators and policymakers and would support stakeholders and decision-makers who wish to discover how executive incentive compensation affects financial performance in banks. Originality/value This study contributes to previous literature by studying the mediating effect of ESG practices on the relationship between executive incentive compensation and banks’ financial performance. Indeed, the originality of this research paper is justified by the scarcity of studies and, to the best of the authors’ knowledge, constitutes one of the first attempts to examine this relationship via a mediating variable, i.e. ESG.

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CEO Compensation and Firm Performance: The Role of ESG Transparency

Cited by 14 publications

References 69 publications

Determinants of Corporate Sustainability Disclosure: The Case of the S&P/EGX ESG Index

Determinants of Corporate Sustainability Disclosure: The Case of the S&P/EGX ESG Index

Chief Executive Officer (CEO) and corporate environmental sustainability: A systematic literature review and avenues for future research

Mediating effect of ESG performance on executive incentive compensation-financial performance relationship: evidence from MENA banking sector

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