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This study aims to address the question of why managers make different decisions in employee downsizing when their firms face external threats. Our research intends to shed light on whether and how CEOs' cognition (motivational attributes associated with regulatory focus) influences their decision-making and firms’ strategic actions on downsizing under high resource scarcity in the industry environment.

We used a longitudinal panel of 5,544 firm-year observations of US firms from 2003 to 2015 to test our conceptual model. The data was obtained from various sources, including corporate earnings call transcripts and archival databases. We used panel logistic regressions with both fixed and random effects in our research design.

Our results suggest that CEOs' motivational attributes could influence their employee downsizing decisions in response to external threats. We find that CEOs who are more promotion-focused (a stronger drive towards achieving ideals) are less likely to lay off employees during high resource scarcity. Conversely, CEOs with a higher prevention focus (a greater concern for security) do not have a meaningful impact on employee downsizing during periods of external resource scarcity.

Previous research has argued that a significant external threat would diminish individuals' impact on firm strategies and outcomes. Our findings challenge this idea, indicating that CEOs with a stronger drive towards achieving ideals are less inclined to lay off employees when resources are scarce in the environment. This study contributes to behavioral strategy research by providing new insights into how upper echelons’ cognition can influence their decision-making and firms’ employee downsizing.

This study investigates the impact of CEO narcissism on eco-innovation. Moreover, we explore the moderating influence of CEO ancestor origins and CEO tenure on this relationship.

Based on a comprehensive dataset comprising 198 non-financial U.S. firms spanning the years 2010–2021, we apply OLS regression.

Our research findings are as follows: (1) CEO narcissism negatively affects eco-innovation. (2) CEO ancestor origins play a moderating role, with this effect being attenuated for CEOs with ancestral origins from highly sustainable backgrounds. (3) CEO tenure strengthens the relationship between CEO narcissism and eco-innovation. This study sheds light on the significance of CEO personality traits in influencing eco-innovation decision-making. The results offer valuable insights for stakeholders, boards of directors and investors.

To the best of our knowledge, none of the studies on sustainable tools have examined the moderating effect of CEO demographics characteristics on the CEO personality traits –eco-innovation nexus, and this offers a great opportunity to make new contributions to the extant literature.

The purpose of this paper is to investigate the relationship between CEOs' inside debt holdings (pension benefits and deferred compensation) and the operating leverage of the firms they manage, with the aim to examine whether CEO incentives play a role in corporate risk-taking.

The authors investigate the relation between CEO inside debt holdings (CIDH) (pension benefits and deferred compensation) and the operating leverage (DOL) of the firms they manage. Using a sample of 11,145 US firm-year observations over the period 2006–2017, the authors find a strong negative association between CIDH and DOL. Additional analyses reveal that the relationship between CIDH and DOL is more pronounced in firms with heightened agency issues, powerful CEOs and for CEOs with stronger professional networks. The results are robust to various sensitivity and endogeneity tests.

The authors find strong evidence confirming the expected negative association between CEO inside debt and DOL suggesting that firms with higher inside debt tend to maintain lower levels of operating leverage. These findings continue to hold with the alternative measure for the inside debt and operating leverage, and across a range of tests designed to rule out the possibility that the primary findings are in any way driven by potential endogeneity. In addition, the findings demonstrate that the presence of manager-shareholder agency conflicts can strengthen the inside debt–DOL relationship suggesting the strong role of inside debt in reducing firm risk.

Findings in this paper have implications for design of compensation structures so that corporate boards can establish incentives as a tool for risk management. A limitation of this study is that it is focused on one market, i.e. US listed companies, so the findings may not be applicable on a global scale.

To the best of the authors’ knowledge, this is the first study that links firm-level management of operating leverage through design of CEO inside debt incentives (two obvious choices for risk-reduction at the CEOs’ disposal include reducing financial risk through reduction of firm leverage and reducing operating risk through reduction of operating leverage). While use of firm leverage as an instrument of choice has been explored in the past, use of operating leverage to achieve risk reduction when CEO possess high inside holding, has received very little attention.

This paper provides the latest systematic literature review (SLR) of prevailing studies on the interrelationship among executive compensation, financial performance and sustainable business practices. This SLR is done in three parts: (1) examine the theories employed by previous studies; (2) identify the unique variables employed by researchers in analysing this interrelationship and (3) explore potential opportunities for further study in the field.

This study conducted an SLR analysing studies from the Web of science, Scopus and EBSCO in over 20 countries from 2009 to 2022 published in several top-ranked journals. We utilised various search strings using the key phrases “executive compensation”, “CEO Pay”, “financial performance” and “sustainable business practices”. The initial sample of 27,210 was filtered with our meticulous inclusion and exclusion criteria to produce a list of 161 studies.

Our findings are as follows: first, most studies encompassing this subject area lack multi-theoretical perspectives with agency theory being the most dominant theoretical viewpoint; second, we observed the use of monotonous quantitative research methods, with studies heavily lacking qualitative and mixed-method research approaches; finally, there is a palpable gap in cross-country studies.

There are a few limitations that must be acknowledged. First, the inclusion criteria ensured that only articles published in the CABS journal ranking of three star and above. Thus, this review may not be a precise reflection of the EC, FP and SBPs literature scope. The inclusion criteria also limit our review to only accounting, finance, management and business-related studies about the topic. Therefore, future studies could explore studies ranked three star and below and from other subject areas.

This study contributes to the existing literature by conducting a comprehensive SLR that examines both the theoretical underpinnings and empirical evidence on this topic. It builds upon previous research and extends our understanding of the interrelationship among executive compensation, financial performance and sustainable business practices.

Based on stakeholder, agency and institutional theory, this study aims to examine the role of institutional ownership in the relationship between environmental, social and governance practices and CEO compensation.

Utilizing a fixed-effect panel regression analysis, this research utilized a panel data approach, analyzing data spanning from 2014 to 2021, focusing on US companies listed on the S&P500 stock market index. The dataset encompassed 219 companies, leading to a total of 1,533 observations.

The analysis identified that environmental scores significantly impact CEO equity-linked compensation, unlike social and governance scores. Additionally, it was found that institutional ownership acts as a moderating factor in the relationship between the environmental score and CEO equity-linked compensation, as well as the association between the social score and CEO equity-linked compensation. Interestingly, the direction of these moderating effects varied between the two relationships, suggesting a nuanced role of institutional ownership.

This research makes a unique contribution to the field of corporate governance by exploring the relatively understudied area of institutional ownership's influence on the ESG practices–CEO compensation nexus.

As the cost of completing a transaction, the green merger and acquisition (M&A) premium paid on mergers can influence whether the acquisition creates value or not. However, studies linking M&A premiums to firm value have had mixed results, even fewer studies have examined the effect of green M&A premiums on bidders’ firm value. The purpose of this paper is to investigate whether and how green M&A premiums affect firm value in the context of China’s heavy polluters.

Using 323 deals between 2008 and 2019 among China’s heavy polluters, this paper estimates with correlation analysis and multiple regression analysis.

Green M&A premiums are negatively associated with firm value. The results are more significant when firms adopt symbolic rather than substantive corporate social responsibility (CSR) strategies. Robustness and endogeneity tests corroborate the findings. The negative relation is stronger when acquiring firms have low governmental subsidy and environmental regulation, when firms have overconfident management, when firms are state-owned and when green M&A occurs locally or among provinces in the same region. This study also analyzes agency cost as an intermediary in the relationship between green M&A premium and firm value, which lends support to the agency-view hypothesis.

This study provides systemic evidence that green M&A premiums damage firm value through agency cost channel and the choice of CSR strategies from the perspective of acquirers. These findings enrich the literature on both the economic consequences of green M&A premiums and the determinants of firm value and provide a plausible explanation for mixed findings on the relationship between green M&A premiums and firm value.

The study examines the social and environmental responsibility indicators disclosed by three International Council on Mining and Metals (ICMM) corporate mining members in their social and environmental reporting (SER) from 2006 to 2014. To achieve this aim, the author limits the data two years before (i.e. from 2006 to 2007) and six years after (i.e. from 2009 to 2014) the implementation of the Sustainable Development Framework in the mining sector in 2008.

Using the techniques of content analysis and interpretive textual analysis, this study examines 27 social and environmental responsibility reports published between 2006 and 2014 by three ICMM corporate mining members. The study develops a disclosure index based on the earlier work of Hackston and Milne (1996), together with other disclosure items suggested in the extant literature and considered appropriate for this work. The disclosure index for this study comprised six disclosure categories (“employee”, “environment”, “community involvement”, “energy”, “governance” and “general”). In each of the six disclosure categories, only 10 disclosure items were chosen and that results in 60 disclosure items.

A total of 830 out of a maximum of 1,620 social and environmental responsibility indicators, representing 51% (168 employees, 151 environmental, 145 community involvement, 128 energy, 127 governance and 111 general) were identified and examined in company SER. The study showed that the sample companies relied on multiple strategies for managing pragmatic legitimacy and moral legitimacy via disclosures. Such practices raise questions regarding company-specific disclosure policies and their possible links to the quality/quantity of their disclosures. The findings suggest that managers of mining companies may opt for “cherry-picking” and/or capitalise on events for reporting purposes as well as refocus on company-specific issues of priority in their disclosures. While such practices may appear appropriate and/or timely to meet stakeholders’ needs and interests, they may work against the development of comprehensive reports due to the multiple strategies adopted to manage pragmatic and moral legitimacy.

A limitation of this research is that the author relied on self-reported corporate disclosures, as opposed to verifying the activities associated with the claims by the sample mining companies.

The findings from this research will help future social and environmental accounting researchers to operationalise Suchman’s typology of legitimacy in other contexts.

With growing large-scale mining activity, potential social and environmental footprints are obviously far from being socially acceptable. Powerful and legitimacy-conferring stakeholders are likely to disapprove such mining activity and reconsider their support, which may threaten the survival of the mining company and also create a legitimacy threat for the whole mining industry.

This study innovates by focusing on Suchman’s (1995) typology of legitimacy framework to interpret SER in an industry characterised by potential social and environmental footprints – the mining industry.

Given the serious question raised by the subprime of the 2008 global financial crisis over the rising practices of excessive rewarding of executives in the USA and European firms, the executive pay-performance nexus has emerged as a popular topic of debate in the contemporary corporate finance research. Conducted mostly on the Anglo-Saxon contexts, research outcomes have been inconclusive and dichotomous. Considering this backdrop, this study aims to investigate the endogenous relationship between executive compensation and risk taking in the context of the USA.

Using a large sample of non-financial firms from 2010 to 2020 based on panel data and two-stage least square regression. In this study, the riskier corporate decision is measured as book leverage and ratio of R&D expense to total assets. Chief executive officers’ (CEO) experience and age are used as instrumental variables, and these are expected to influence compensation incentives and, hence, affect firm riskiness indirectly. Firm size, return on assets and CEO turnover are reported to affect compensation and corporate decisions, therefore, included as control variables. Given that higher executive compensation is related to riskier corporate decision in firms, this study incorporates total wealth (i.e. accumulated equity related compensation) as an additional proxy of compensation, and this selection is justifiable by the perfect contracting notion of the agency theory.

The results of this study show a significant positive and increasing nexus among compensation and riskier corporate decisions. Besides, the compensation level proxied through the percentage of each form of compensation in total compensation is very important as greater equity and greater salary diminishes risk taking.

The outcomes of this study have useful implications for firm stakeholders and policymakers.

The level of pay measured by the percentage of each type of compensation in total compensation is of utmost importance as it can increase or decrease risk taking in corporate decisions.

Under the background of continuous sluggishness of the real economy and expansion of asset sectors, the Chinese economy exists a trend of “from the real to the virtual.” Managing the corporate financialization is the key to prevent the real economy “from real to virtual.” The paper explores the influence of family involvement on corporate financialization since family firms are an important proportion of real sectors.

Based on Socioemotional Wealth Theory, this paper makes empirical study using the data of Chinese A-share listed companies from 2008 to 2022 to explore the influence of family involvement on corporate financialization, mainly from the perspectives of family engagement, family identity of CEO and family control power.

These are the findings: (1) Family engagement will inhibit corporate financialization; (2) Compared with employing external managers, family members acting as CEOs will decrease corporate financialization; (3) The proportion of family ownership is negatively correlated with the level of corporate financialization.

The originality of this paper include these: (1) Analyzing the differences in the financialization of real enterprises with different characteristics and attributes; (2) Expanding the research on the internal motivation of the financialization of the real enterprises, and supplementing the research literature on family firms and corporate financialization; (3) Exploring the internal influence mechanism of financialization of family firms under the background of Chinese culture.

This study aims to investigate how a firm's management team's capacity to efficiently use its resources affects the firm's exposure to climate change. Specifically, the authors investigate the intriguing question – does managerial ability affect a firm's climate change exposure?

The authors use an unbalanced panel dataset of 4,230 US based firms listed on Compustat from 2002–2019 and test the hypothesis by panel regression analysis. To mitigate endogeneity concerns, difference-in-differences and instrumental variable approaches are used.

The baseline analysis shows a negative, statistically significant impact of managerial ability on climate change exposure. The findings hold after controlling for endogeneity using two-stage least squares regression and difference-in-differences tests. The authors find the negative effect is stronger for managers engaged in socially responsible activities, and after climate change issues receiving greater public awareness following the 2006 release of the Stern Review and the 2016 signing of the Paris Accord.

Motivated by the resource-based theory and the natural resource-based view of the firm model, the empirical results support the view that greater managerial ability protects the firm against environmental challenges through efficient use of firm resources. Compared with traditional climate change measures that are plagued by disclosure issues, the use of the Sautner, Van Lent, Vilkov and Zhang's machine learning based dataset utilizing earning conference calls provides stronger, robust findings that will be useful to management and investors in environmental performance assessments.

Motivated by the resource-based theory and the natural resource-based view of the firm model, the empirical results support the view that greater managerial ability protects the firm against environmental challenges through efficient use of firm resources. Compared with traditional climate change measures that are plagued by disclosure issues, the use of the machine learning based dataset utilizing earning conference calls provides stronger, robust findings that will be useful to management and investors in environmental performance assessments.