Influence of Cultural and Environmental Values of CEOs on Greenhouse Gas Emission Intensity

Abstract

The main objective of this study is to examine the influences of two novel characteristics of the foremost executive firm managers, i.e., the environmental and cultural values of CEOs, on corporate climate change performance. Employing a sample of firms listed in the FTSE250 covering the 2008–2018 period, we found that firms run by CEOs with environmentally friendly backgrounds and high ‘green’ cultural values are more inclined to aim for better (lower) greenhouse gas emissions. The findings hold after accounting for other relevant governance characteristics, accounting and market indicators, highly carbon-intensive industries, and potential endogeneity issues. Intriguingly, we also found that the effect of CEO environmental values is more pronounced than that of CEO cultural values. Our findings have implications for corporate management and regulators of climate change concerns and corporate environmental performance. That is, firm management is advised to assign CEOs with environmentally friendly backgrounds and high ‘green’ cultural values to lower greenhouse gas emissions.