CEO characteristics: do they matter for carbon performance? An empirical investigation of Australian firms

Abstract

PurposeResearch suggests that chief executive officers (CEOs) play an important role in enhancing a firm’s legitimacy with regard to environmental performance. The purpose of this paper is to use the upper echelons theory and stakeholder theory to investigate whether the characteristics of CEOs are associated with carbon performance (CP).Design/methodology/approachThis paper uses a sample of 128 firm-year observations from Australian companies that participated in the carbon disclosure project from 2011 through 2014.FindingsTwo-stage least squares estimation reveals that CEO executive experience and CEO duality are positively associated with CP. By contrast, CEO tenure, CEO functional background experience and CEO industry experience are negatively related to CP, and CEO ownership is not related to CP.Practical implicationsThe results might provide evidence for investors, policymakers and regulators with respect to the effectiveness of CEO characteristics for addressing carbon risks and possible linkages between CEO characteristics and carbon emission levels. In addition, the results give support CEO accountability regarding the carbon emissions.Originality/valueThis study provides the first empirical evidence of the impact of CEO characteristics on CP. Furthermore, this study contributes to the existing literature by showing how the characteristics of CEOs can impact corporate CP and provides a more in-depth understanding of whether such characteristics play important roles in determining corporate carbon action.