How CEO Affects ESG and the Financial Performance of Companies

  • Inzilya Farrakhova


In the past decade the society grew more interested in corporate operations concerning environmental, social, and corporate governance (ESG). This paper is dedicated to study of influence of CEO’s personal characteristics on financial performance of companies and interrelation between ESG indicators and corporate financial performance. For this purpose
we have conducted a review of scientific literature on this topic, established interrelation between financial indicators and ESG indicators, determined the main characteristics which influence corporate financial indicators. For this purpose we developed a model of CEO’s personal characteristics. The paper studied characteristics of CEOs from Russian companies, compiled a rating of CEOs taking into consideration financial and ESG indicators of companies, considered influence of the CEO’s position in this overall rating on financial
indicators of a company.

The research sample comprises 81 Russian companies of the real sector which are in the Moscow Exchange index and 123 CEOs. The time interval covered by this research is seven years since 2013 to 2019. Analysis was performed in the statistics package STATA applying panel data analysis as a method. Return on assets, return on equity and the market capitalization
indicator were used as dependent variables. We chose disclosure of ESG information by a company, CEO’s score in the overall rating and such CEO’s characteristics as age, tenure and financial education as explicative variables. Financial leverage and company size were used as control variables. We also added return on assets to some model specifications in
order to improve the model quality.


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Как цитировать
FarrakhovaI. (2022) «How CEO Affects ESG and the Financial Performance of Companies», Journal of Corporate Finance Research / Корпоративные Финансы | ISSN: 2073-0438, 16(4), сс. 93-118. doi: 10.17323/j.jcfr.2073-0438.16.4.2022.93-118.
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