CEO personality and corporate sustainability performance

Abstract

Purpose

This study aims to examine how chief executive officer's (CEO) personality traits influence the corporate sustainability performance (CSP) of firms. The paper also examines the moderating effect of board power on this relationship.

Design/methodology/approach

Using a linguistic tool (IBM's Watson Personality Insight Service), the authors measured the personality traits of 229 CEOs from 176 firms from 2009 to 2018. Firm-level CSP are obtained from the Sustainalytics database. The hypotheses are tested using multiple regression analysis. The robustness of the results of the study is confirmed by addressing endogeneity concerns and by validating the measurement of CEO personality traits using Personality Recognizer, an alternative linguistic tool.

Findings

The results show that CEO personality traits of extraversion and neuroticism are significant predictors of CSP. The paper also identifies board power as a contingent factor that influences the suggested relationships.

Originality/value

Using upper echelon theory and cybernetic big five theory, this paper identifies CEO personality traits as important antecedents of corporate sustainability performance and adds to the micro-foundations of corporate sustainability literature. To the authors’ understanding, this is the first study that examines the influence of CEO personality on CSP using a comprehensive trait framework. The paper also demonstrates the usefulness of text-analytic tools to measure CEO personality traits, thereby contributing to the progress of upper echelon theory.

Citation

Venugopal, A., Nerur, S., Yasar, M. and Rasheed, A.A. (2023), "CEO personality and corporate sustainability performance", Management Decision, Vol. 61 No. 12, pp. 3691-3716. https://doi.org/10.1108/MD-06-2022-0842