The Influence of CEO Power and Foreign Ownership on Environmental, Social, and Governance Performance
DOI:
https://doi.org/10.24036/wra.v14.i2.27Keywords:
CEO power, foreign ownership, ESG performance, emerging economyAbstract
Purpose – This study aims to examine the influence of CEO power and the foreign ownership on ESG performance of companies listed on the Indonesia Stock Exchange (IDX) during 2020-2023.
Design/methodology/approach – This study was conducted using a sample of 44 companies listed on the Indonesia Stock Exchange, resulting in a total of 176 observations. To examine the hypothesis formulated in this research, panel data regression analysis was applied, utilizing Eviews software version 12 as the analytical tool.
Findings – Based on the results of this study, CEO power is found to have a positive and significant effect on ESG performance, while foreign ownership does not have a significat effect on ESG performance.
Originality/value – This study contributes to the literature by simultaneously testing the effects of CEO power and foreign ownership on ESG performance in Indonesian companies, a combination that has rarely been examined in a single research model. Furthermore, this study uses ESG metrics based on Refinitiv Eikon scores, which are more objective and globally standardized, and covers the 2020-2023 period, reflecting the growing attention to sustainability issues.
Research limitations/implications – A limitation of this study is that observation period covers with only covers four years, making it unable to fully represent the overall state of ESG performance. Furthermore, the measurement of CEO power in this study is limited to three proxies: CEO membership, CEO tenure, and CEO share, thus not comprehensively reflecting all dimensions of CEO power. This study also analyzes ESG performance without separating each dimension. Therefore, the results obtained do not yet provide a comprehensive description of the company's ESG performance.
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