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The moderating effect of CEO incentives and ideology in shaping the association between ESG performance and financial success

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  • Maria Cristina Dorobantu

    (University of Amsterdam, Amsterdam, Netherlands
    Deloitte, Bucharest, Romania)

  • Sanjay Bissessur

    (University of Amsterdam, Amsterdam, Netherlands)

Abstract

Financial incentives and personal ideologies play a pivotal role in shaping firm outcomes. Analyzing data from North American firms between 2010 and 2019, our results show that ESG-aligned compensation is significantly associated with ESG performance, suggesting effective incentive structuring. We also find a positive relationship between improved ESG performance and enhanced financial returns, highlighting the economic benefits of sustainable practices. CEOs with pro-sustainability values can more effectively translate ESG objectives into financial returns. Conversely, the independence of the board of directors shows a limited effect, with firms with more independent boards displaying a slightly higher relationship between ESG performance and financial outcomes.

Suggested Citation

  • Maria Cristina Dorobantu & Sanjay Bissessur, 2025. "The moderating effect of CEO incentives and ideology in shaping the association between ESG performance and financial success," Maandblad Voor Accountancy en Bedrijfseconomie Articles, Maandblad Voor Accountancy en Bedrijfseconomie, vol. 99(2), pages 109-120, June.
    • Handle: RePEc:arh:jmabec:v:99:y:2025:i:2:p:109-120
    DOI: 10.5117/mab.99.132901
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