The moderating effect of CEO incentives and ideology in shaping the association between ESG performance and financial success
Financial incentives and personal ideologies play a pivotal role in shaping firm outcomes. Analyzing data from North American firms between 2010 and 2019, our results show that ESG-aligned compensation is significantly associated with ESG performance, suggesting effective incentive structuring. We a...
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| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Pensoft
2025-06-01
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| Series: | MAB |
| Online Access: | https://mab-online.nl/article/132901/download/pdf/ |
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| Summary: | Financial incentives and personal ideologies play a pivotal role in shaping firm outcomes. Analyzing data from North American firms between 2010 and 2019, our results show that ESG-aligned compensation is significantly associated with ESG performance, suggesting effective incentive structuring. We also find a positive relationship between improved ESG performance and enhanced financial returns, highlighting the economic benefits of sustainable practices. CEOs with pro-sustainability values can more effectively translate ESG objectives into financial returns. Conversely, the independence of the board of directors shows a limited effect, with firms with more independent boards displaying a slightly higher relationship between ESG performance and financial outcomes. |
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| ISSN: | 2543-1684 |