The impact of insider CEOs on corporate carbon emissions performance: the moderating role of corporate governance

What the paper says

Purpose This study aims to examine the relationship between insider CEOs and corporate carbon emissions performance in emerging economies. Specifically, the authors explore the mechanism of the corporate governance index as a moderating effect on the nexus. Design/methodology/approach Using the quantitative approach with fixed-effect regression analysis to examine the proposed hypothesis. This study comprises all publicly listed firms in Indonesia spanning from 2010–2023 including 1,190 firm-year observations. In addition, the authors also incorporate the causality and robustness analyses to ensure the endogeneity problems. Findings This study provides evidence that top executives promoted from within are more negatively related to carbon emissions performance. Furthermore, larger firms with more assets are also more likely to have lower carbon emissions performance. However, firms that have recently experienced a surge in profits are likely to have better carbon emissions performance. Research limitations/implications This study offers the idea that insider CEOs have the ability in two main aspects, legitimacy of the company’s vision and mission and high personal relationships, loyalty and trust, where countries with high collectivity dominance, such as Indonesia, are the main needs besides the considerations of outsider CEOs. Originality/value This paper raises an important issue in the business literature, where highly collectivist cultures are associated with trust, loyalty and strong personal relationships. In this regard, insider CEOs play an important role in maintaining this dignity to meet stakeholder expectations alongside outsider CEOs. Furthermore, the demographic features of new CEOs should be considered during their selection process.