Does CEO Risk-Aversion Affect Carbon Emission?

Firm‐Level Climate Change Risk and CEO Equity Incentives

“…Second, greenwashing (i.e. increased CSR activities to conceal environmentally unfriendly tags) has become a widespread corporate practice (Balluchi, Lazzini and Torelli, 2020; Hossain, Saadi and Amin, 2022; Marquis, Toffel and Zhou, 2016; Pizzetti, Gatti and Seele, 2021; Wu and Shen, 2013; Zhang, 2022). Third, CSR has proved to be effective in reducing CCR (Hossain and Masum, 2022).…”

CEO inside debt holdings and trade credit

“…In this study, we focus on CIDH since the CEO is the highest ranked executive in a company, and is primarily responsible for formulating key corporate strategy, policies and decisions, and for managing overall business operations and resources (Cassell et al ., 2012). The motivation for this study stems from recent evidence that inside debt holdings are sizeable, and constitute a major component of executive compensation (Cassell et al ., 2012; Anantharaman et al ., 2014; Phan, 2014; Bhabra et al ., 2021; Hossain et al ., 2021). For instance, Wei and Yermack (2011) report an average CEO debt‐to‐equity ratio of 0.22 in 2006, while Kim et al .…”

Asset redeployability and CEO inside debt

“…This is because deferred compensation is largely unsecured and unfunded and therefore presents a significant risk of wealth loss to managers in the event of firm failure. It is therefore not surprising that CEOs with high inside debt exhibit excessive caution in investment decisions (see, e.g., Cassell et al, 2012; Gerakos, 2010; Sundaram & Yermack, 2007) which could at times even harm long‐term sustainability (Hossain et al, 2023). Other evidence that links CEO risk‐aversion (arising out of inside debt) to corporate policy choices include larger cash holdings in firms led by CEOs with high inside debt (Liu et al, 2014), less reliance on trade credit (Hasan et al, 2022), firms enjoying a lower cost of debt along with fewer restrictive covenants (see, e.g., Anantharaman et al, 2014; Chava et al, 2010), better credit ratings (Hasan et al, 2023), a lower incidence of tax sheltering (Chi et al, 2017), lower payouts (Eisdorfer et al, 2015), higher liquidation values (Chen et al, 2010) and better acquisition deals signified by higher post‐acquisition returns (Bhabra et al, 2022; Phan, 2014).…”