Academia to Action: Managerial Academic Experience and Corporate ESG Performance
51 Pages Posted: 8 Dec 2023
Date Written: December 4, 2023
Abstract
This paper examines the impact of managerial academic experience on corporate environmental, social, and governance (ESG) performance. We find that firms with more academic executives in the top management team exhibit significantly higher ESG performance. In addition, our results suggest that the effect is stronger for firms with young academic executives. To address potential endogeneity concerns, we employ instrumental variables and propensity score matching approaches and confirm our main findings. Moreover, we show that high ESG performance of firms with academic executives is consistent with shareholder value and unlikely driven by agency issue. To corroborate our main findings using observable ESG actions, we show that firms with academic executives have lower pollution intensity and engage more in philanthropy. Finally, we show evidence that academic executives improve firm ESG performance through increases in capital expenditure rather than financial leverage.
Keywords: Managerial academic experience; ESG performance; Agency issue; Pollution intensity; Corporate philanthropy; Capital expenditure
JEL Classification: G30, G40, J24, M14
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