The Relationship between CFO Compensation and Corporate Sustainability: An Empirical Examination of German Listed Firms

Profitlich, Mirko; Bouzzine, Yassin Denis; Lueg, Rainer

doi:10.3390/su132112299

Cited by 13 publications

(7 citation statements)

References 45 publications

(101 reference statements)

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“…In particular, the effect of CS on performance and risk management is of great interest to firms who have to make decisions regarding investment in CS [3][4][5]. At the same time, shareholders, such as fund managers, are increasing their focus on sustainable investments that promise lower long-term risk management and the avoidance of strict future regulation [6][7][8]. Institutionally managed assets strive to meet the criteria of socially responsible investment (SRI) [9], while firms focus on the implementation of CS, as it can affect the firm's value through risk management [10].…”

Section: Introductionmentioning

confidence: 99%

Corporate Sustainability and Risk Management—The U-Shaped Relationships of Disaggregated ESG Rating Scores and Risk in the German Capital Market

Korinth

Lueg

2022

Sustainability

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This study addresses the relationship between the (dis)aggregated ESG rating and different types of risk (i.e., market risk, idiosyncratic risk, total risk) in the German stock market. We investigate not only the overall ESG rating and the E, S, and G pillar scores but also all the underlying category scores. Thereby, we provide in-depth insight into diverse CS operations. We cover 454 firm years (2012–2019) using ordinary least squares regression with firm and year fixed effects. Our main insights are the U-shaped relationships between CS and risk: Ecological investments first decrease systematic risk (beta), while overinvestment increases systematic risk again. Likewise, social investments initially decrease idiosyncratic risk, while overinvestment increases idiosyncratic risk again. Further findings suggest only one linkage between systematic risk and the social pillar score. In the category scores, a few more relevant linkages were identified, which indicates that disaggregation of the ESG ratings increases the explanatory power of models. In respect to findings from other capital markets, it appears that the effects of the ESG ratings on risk may depend on the existing level of sustainability in the capital market. Last, our study provides insights into the nonlinearity of the CS–risk relationships.

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Section: Introductionmentioning

confidence: 99%

Corporate Sustainability and Risk Management—The U-Shaped Relationships of Disaggregated ESG Rating Scores and Risk in the German Capital Market

Korinth

Lueg

2022

Sustainability

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“…Secondly, it only considered several characteristics of CFO. Future studies may consider the CFO social ties (Kuang et al, 2022;Qi et al, 2017) and CFO compensation (Caglio et al, 2018;Profitlich et al, 2021). Thirdly, we only conducted bivariate analyses, hence did not consider other variables that could influence the ESG Ratings.…”

Section: Discussionmentioning

confidence: 99%

Chief Financial Officers and Environmental, Social and Governance: Preliminary Evidence From Malaysia

Alrazi,

Husin,

Nor

2023

European Proceedings of Finance and Economics

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Environmental, social and governance (ESG) continues to be the most significant risk facing the world in the next decade. Failure in climate change adaptation and mitigation, extreme weather, loss of biodiversity, erosion of social cohesion, livelihood crises and infectious diseases were among the major concerns being highlighted in the recent World Economic Forum's survey. Countries around the globe have been working together to address these risks by responding to the 2030 Agenda for Sustainable Development and continuous monitoring of its 17 goals since September 2015. In a similar vein, there have been many calls for the chief financial officers (CFOs) to lead their organisational journey towards sustainability. The launching of CFO Principles on Integrated SDG Investments and Finance in year 2020 and CFO Coalition for the SDGs recently have cemented the significant role of CFOs in sustainability. In Malaysia, the national accounting regulatory body -Malaysian Institute of Accountants (MIA)have set ESG high on its agenda and it is to be embraced by all its members. Drawing upon upper echelons perspective and resource-based theory, this research presents preliminary evidence on the relationship between CFO characteristics and ESG ratings among public listed companies in Malaysia. Based on the analysis of 252 companies for the year 2022, we observed the influence of CFO professional qualification, ethnicity, and tenure. This research focuses on a topic which has not been extensively investigated by the past researchers. Furthermore, it offers practical implications on matters related to CFOs in ensuring corporate sustainability.

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“…The paper also refers to issues of sustainable development. Financial pellucidity, containing clearness of transactions, is one of the mainstays of sustainability [75,76]. The research sphere analysing the relationships between the ownership structure, monitoring activities through the accounting information and sustainability is an important part of contemporary finance and accounting [77][78][79][80].…”

Section: Discussionmentioning

confidence: 99%

Revenue Identification in Attaining Consensus Estimates on Income Predictions: The Function of Ownership Concentration and Managerial Ownership Confirmation from Poland

Piosik

2021

Sustainability

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Financial reliability, along with clearness of business transactions, is one of the mainstays of sustainability. In this research, I investigate whether enterprises expand discretionary revenue when their income before intentional shaping is marginally under the consensus on the income prediction provided by analysts. The innovation of the paper lies in taking into account the role of managerial ownership, ownership concentration, and higher proportions of institutional investors in this situation. Higher ownership concentration and greater percentage of institutional investors in equity were analysed while considering the expropriation hypothesis. In order to assess the concern of managerial ownership for revenue manipulation, I considered the alignment of interest hypothesis. In this research, I certified that enterprises expand discretionary revenue when their revenue and operating income prior to intentional shaping barely miss the consensus forecast. I found that the existence of managerial ownership curtailed the magnitudes of upward discretionary revenue when revenue prior to intentional shaping was marginally below the consensus on revenue. Greater ownership concentration and higher proportions of institutional investors were on the bound of the statistical trend to expand discretionary revenue when net earnings, before intentional shaping, were marginally below analysts’ forecasts.

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The Relationship between CFO Compensation and Corporate Sustainability: An Empirical Examination of German Listed Firms

Cited by 13 publications

References 45 publications

Corporate Sustainability and Risk Management—The U-Shaped Relationships of Disaggregated ESG Rating Scores and Risk in the German Capital Market

Corporate Sustainability and Risk Management—The U-Shaped Relationships of Disaggregated ESG Rating Scores and Risk in the German Capital Market

Chief Financial Officers and Environmental, Social and Governance: Preliminary Evidence From Malaysia

Revenue Identification in Attaining Consensus Estimates on Income Predictions: The Function of Ownership Concentration and Managerial Ownership Confirmation from Poland

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