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ESG disclosures and firm risk-taking - the moderating role of female CEOs and CEO power

Author

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  • Sanjukta Brahma
  • Dimitrios N. Koufopoulos
  • Epameinondas Katsikas
  • Jing Zhang

Abstract

PurposeThe purpose of this paper is to examine the effect of the role of environmental, social, and governance (ESG) disclosures on firms' risk-taking. The paper further investigates whether female chief executive officers (CEOs) and various dimensions of CEO power could explain the ESG risk-taking relationship.Design/methodology/approachUsing a sample of Fortune 500 firms from 2003 to 2020, this study has applied fixed effect, instrumental variables-two-stage least squares and system generalised method of moments estimation to examine the impact of ESG disclosure on firm risk-taking. This study has used two measures of firm risk – systematic risk and performance hazard risk.FindingsFirst, our results show that firms' ESG disclosures positively affect risk-taking for all four pillars of ESG – combined score, environmental score, social score and governance score. These results are consistent across both accounting and market-based measures. Second, we find that this risk-taking incentive weakens in the presence of female CEOs and CEO informal power. Third, the results suggest that the positive relationship between ESG disclosures and risk-taking is more pronounced in the presence of CEO formal power.Originality/valueThese results indicate that CEO power could act as a double-edged sword in determining the relationship between ESG disclosures and firm risk-taking. We control for endogeneity concerns, and the results are robust when alternative measures are used for risk and ESG.

Suggested Citation

  • Sanjukta Brahma & Dimitrios N. Koufopoulos & Epameinondas Katsikas & Jing Zhang, 2026. "ESG disclosures and firm risk-taking - the moderating role of female CEOs and CEO power," Review of Behavioral Finance, Emerald Group Publishing Limited, vol. 18(2), pages 232-267, January.
    • Handle: RePEc:eme:rbfpps:rbf-10-2025-0433
    DOI: 10.1108/RBF-10-2025-0433
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