CEO career concerns and ESG investments

This paper examines whether CEO (Chief Executive Officer) career concerns affect ESG (Environmental, Social, and Governance) investments and finds a positive relationship between them. More specifically, we find empirical evidence that CEOs with shorter tenure, more outside opportunities, and more long-term oriented compensation structure are more likely to invest in ESG investments as they have greater career concerns. Furthermore, we find that this positive relationship between CEO career concerns and ESG investments is less evident in overpaid CEOs or states that adopt Corporate Opportunity Waivers (COW) law. These results indicate that extrinsic motivation can affect ESG investments when CEOs face significant career concerns.