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Evaluating Executives and Non-Executives’ Impact toward ESG Performance in Banking Sector: An Entropy Weight and TOPSIS Method

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  • Georgia Zournatzidou

    (Department of Business Administration, University of Western Macedonia, GR51 100 Grevena, Greece)

Abstract

Financial institutions should prioritize the adoption of comprehensive Environmental, Social, and Corporate Governance (ESG) disclosure policies to improve their market reputation and decrease capital expenditures. The current study’s research objective is to investigate the impact of both inside and outside executives on the successive adoption of ESG strategies, based on the sustainable leadership theoretical framework and the bottom-up corporate governance theory. Data for the current study were obtained from the Refinitiv Eikon database and analyzed through using the entropy weight and TOPSIS techniques. The research suggests that including fully autonomous board members has the potential to improve the transparency of firms’ ESG criteria. This result was derived from an analysis of data pertaining to the behavior of CEOs and non-executives at the company level in Fiscal Year (FY) 2023. The verification of the soundness and dependability of this finding has been carried out by scrutinizing the problem of endogeneity and diverse techniques of data representation. Furthermore, our study has disproven the idea that having CEOs on the board of directors may significantly improve the ESG performance of financial institutions. Consequently, the research proposes that adopting a strict policy of board independence has the capacity to alleviate the environmental, social, and governance repercussions that arise from the control of internal executives, namely CEOs.

Suggested Citation

  • Georgia Zournatzidou, 2024. "Evaluating Executives and Non-Executives’ Impact toward ESG Performance in Banking Sector: An Entropy Weight and TOPSIS Method," Administrative Sciences, MDPI, vol. 14(10), pages 1-20, October.
    • Handle: RePEc:gam:jadmsc:v:14:y:2024:i:10:p:255-:d:1495531
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    References listed on IDEAS

    as
    1. Ferriani, Fabrizio, 2023. "Issuing bonds during the Covid-19 pandemic: Was there an ESG premium?," International Review of Financial Analysis, Elsevier, vol. 88(C).
    2. Ji, Xinru & Chen, Xiaoxu & Ao, Zhiming, 2024. "ESG rating, board faultlines, and corporate performance," Research in International Business and Finance, Elsevier, vol. 72(PB).
    3. Geng, Yuan & Chen, Jinyu & Liu, Ran, 2024. "ESG rating disagreement and corporate green innovation bubbles: Evidence from Chinese A-share listed firms," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    4. Wang, Miao & Wang, Yiduo & Wen, Shouxun, 2024. "ESG performance and green innovation in new energy enterprises: Does institutional environment matter?," Research in International Business and Finance, Elsevier, vol. 71(C).
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