Executive Ownership and Sustainability Performance

44 Pages Posted: 19 Oct 2022

See all articles by Marco Ghitti

Marco Ghitti

University of Padua - Department of Economics and Management

Gianfranco Gianfrate

EDHEC Business School

Edoardo Reccagni

Bocconi University

Date Written: October 12, 2022

Abstract

Executive ownership addresses agency problems by aligning the financial goals of management and shareholders. We explore whether executive ownership fosters a non-financial sustainability footprint as well. We find that executive ownership is negatively associated with US firms’ environmental and social performance. A quasi-natural experiment shows that the inverse relationship between executive ownership and sustainability performance is causal. Executive ownership schemes can thus be detrimental for firms aiming to maximize stakeholder value by addressing environmental and social challenges. Executive compensation should rather include incentives explicitly linked to sustainability goals.

Keywords: Executive ownership, ESG, Sustainability, Stakeholders, Agency Theory

JEL Classification: G32, M14, Q56

Suggested Citation

Ghitti, Marco and Gianfrate, Gianfranco and Reccagni, Edoardo, Executive Ownership and Sustainability Performance (October 12, 2022). Available at SSRN: https://ssrn.com/abstract=4245888 or http://dx.doi.org/10.2139/ssrn.4245888

Marco Ghitti

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

Gianfranco Gianfrate (Contact Author)

EDHEC Business School ( email )

58 rue du Port
Lille, 59046
France

Edoardo Reccagni

Bocconi University

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
219
Abstract Views
1,173
Rank
260,546
PlumX Metrics