CEO Financial Expertise and Firms Social and Environmental Performance: The Mediating Role of Environmental Management Practices

Abstract

Purpose: This study considers the impact of CEO financial expertise on social and environmental performance and the mediating role of environmental management practices in this relationship is also considered. Design/methodology/approach: The span of the research considered ten years’ data ranges from 2013 to 2022 of non-financial firms of FTSE 100-index listed on London stock exchange (LSE). This research successfully applied previously defined regression methodology to test the hypothesis investigating the significance of CEO financial expertise. Findings: Empirical investigation reveals that the CEO financial expertise are not only associated with financial measures, but they also play a significant role in non-financial performance measures like environmental and social performance. The mediating role of environmental management practices has a positive impact in this relationship. Practical Implications: Results of this study show that among the other CEO attributes the CEO financial expertise is important in shaping the environmental and social profile of the company through allocation of resources by enhancing the environmental management practices. These factors are key contributors to companies’ sustainable business performance, and a financial expert CEO is more aware of their long-standing impact. Originality/Value: In this study the firms of developed economy of UK are considered that range from multiple sectors to successfully establish the significance of CEO financial expertise in environmental and social performance and indirect effect played by the adoption of environmental management practices in shaping this relationship. This study tried to extend the CEO attributes and corporate environmentalism literature and validated the environmental management practices measure that is not previously used with the study variables. Key words: CEO financial expertise, environmental performance, social performance and environmental management practices