ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market

Financial Markets, Institutions and Instruments, Forthcoming

64 Pages Posted: 20 Oct 2022

See all articles by Gonul Colak

Gonul Colak

University of Sussex ; Hanken School of Economics

Timo Korkeamaki

Aalto University - Aalto University School of Business, Department of Finance, Students

Kent Hickman

Gonzaga Univesity

Niclas Oskar Meyer

Hanken School of Economics

Date Written: May 28, 2022

Abstract

Using an international sample of firms, we investigate the career prospects of directors of firms experiencing negative ESG issues. By tracking the same director at the same firm over time, we document a significant drop in seats held at other public firms’ boards following intense negative media coverage of an ESG problem occurring at a given director’s focal firm. Losses of seats at other firms are concentrated among executive directors, among directors of firms located in countries with high environmental and social norms, and among directors of firms located in countries with bank-based systems. Nonexecutive directors and directors of firms located in less stakeholder-oriented countries are not penalized for ESG issues by the director labor market.

Keywords: Director Career Prospects, Director Labor Market, ESG, Stakeholder Orientation, Shareholder Value, Legal Origin

JEL Classification: G34, M14, A13, G15

Suggested Citation

Colak, Gonul and Korkeamaki, Timo and Hickman, Kent and Meyer, Niclas Oskar, ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market (May 28, 2022). Financial Markets, Institutions and Instruments, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4237999

Gonul Colak

University of Sussex ( email )

Jubilee Building
Falmer
Brighton, BN1 9SN
United Kingdom

Hanken School of Economics ( email )

P.O. Box 479
Arkadiankatu 22
FI-00100 Helsinki, 00100
Finland

Timo Korkeamaki

Aalto University - Aalto University School of Business, Department of Finance, Students ( email )

Finland

Kent Hickman

Gonzaga Univesity ( email )

Spokane, WA
United States

Niclas Oskar Meyer (Contact Author)

Hanken School of Economics ( email )

PB 479
Arkadiagatan 22
Helsinki, Uusimaa 00100
Finland
+358407573658 (Phone)

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