IDEAS home Printed from https://ideas.repec.org/a/kap/jmgtgv/v29y2025i1d10.1007_s10997-024-09695-y.html
   My bibliography  Save this article

The impact of executive cognitive characteristics on a firm’s ESG performance: an institutional theory perspective

Author

Listed:
  • Manzhi Liu

    (China University of Mining and Technology
    China University of Mining and Technology)

  • Jia Lu

    (China University of Mining and Technology)

  • Qiyao Liu

    (China University of Mining and Technology)

  • Hui Wang

    (China University of Mining and Technology)

  • Yaxin Yang

    (China University of Mining and Technology)

  • Shuting Fang

    (China University of Mining and Technology)

Abstract

In the current global landscape, Environmental, Social, and Governance (ESG) serves as a vital metric for measuring the sustainable development level of listed companies. With respect to this matter, government departments and company managers have gradually taken notice of the company’s ESG performance. This paper proposed a theoretical model that integrates Scott’s institutional theory and the social embedding theory to evaluate the cognitive characteristics of top managers. Focusing on the period spanning from 2011 to 2020, an examination was conducted on the influence of executive cognitive characteristics on the ESG performance of enterprises under the moderating effect of local fiscal intervention. The empirical analysis results highlighted that executive compensation incentives, educational background, and political association had a promoting effect on the ESG performance of enterprises. Equally crucial, the greater the level of political correlation among executives, the less beneficial it is for the advancement of ESG performance among enterprises. Further research results underlined that local fiscal intervention had a negative moderating effect on the relationship between executive compensation incentives, educational levels, and political association levels on enterprise ESG performance, that is, in areas where there is a significant degree of local fiscal intervention. Ultimately, local fiscal intervention weakens the relationship between executive characteristics and ESG performance.

Suggested Citation

  • Manzhi Liu & Jia Lu & Qiyao Liu & Hui Wang & Yaxin Yang & Shuting Fang, 2025. "The impact of executive cognitive characteristics on a firm’s ESG performance: an institutional theory perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(1), pages 145-173, March.
    • Handle: RePEc:kap:jmgtgv:v:29:y:2025:i:1:d:10.1007_s10997-024-09695-y
    DOI: 10.1007/s10997-024-09695-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10997-024-09695-y
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10997-024-09695-y?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Agrawal, Anup & Knoeber, Charles R, 2001. "Do Some Outside Directors Play a Political Role?," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 179-198, April.
    2. Ye Liu & Xindan Li & Haijian Zeng & Yunbi An, 2017. "Political connections, auditor choice and corporate accounting transparency: evidence from private sector firms in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(4), pages 1071-1099, December.
    3. Ding, Shujun & Jia, Chunxin & Wu, Zhenyu & Zhang, Xiaoqing, 2014. "Executive political connections and firm performance: Comparative evidence from privately-controlled and state-owned enterprises," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 153-167.
    4. Masson, Robert Tempest, 1971. "Executive Motivations, Earnings, and Consequent Equity Performance," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1278-1292, Nov.-Dec..
    5. Chen, Shouming & Bu, Miao & Wu, Sibin & Liang, Xin, 2015. "How does TMT attention to innovation of Chinese firms influence firm innovation activities? A study on the moderating role of corporate governance," Journal of Business Research, Elsevier, vol. 68(5), pages 1127-1135.
    6. Conyon, Martin J. & He, Lerong, 2011. "Executive compensation and corporate governance in China," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 1158-1175, September.
    7. Shao, Yingying & Hernández, Rodrigo & Liu, Pu, 2015. "Government intervention and corporate policies: Evidence from China," Journal of Business Research, Elsevier, vol. 68(6), pages 1205-1215.
    8. Rizopoulos, Yorgos A. & Sergakis, Dimitrios E., 2010. "MNEs and policy networks: Institutional embeddedness and strategic choice," Journal of World Business, Elsevier, vol. 45(3), pages 250-256, July.
    9. Mara Faccio, 2006. "Politically Connected Firms," American Economic Review, American Economic Association, vol. 96(1), pages 369-386, March.
    10. Asim Ijaz Khwaja & Atif Mian, 2005. "Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(4), pages 1371-1411.
    11. Haowen Tian & Gaoliang Tian, 2022. "Corporate sustainability and trade credit financing: Evidence from environmental, social, and governance ratings," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1896-1908, September.
    12. Lois Mahoney & Linda Thorn, 2006. "An Examination of the Structure of Executive Compensation and Corporate Social Responsibility: A Canadian Investigation," Journal of Business Ethics, Springer, vol. 69(2), pages 149-162, December.
    13. Campbell, Katherine & Johnston, Derek & Sefcik, Stephan E. & Soderstrom, Naomi S., 2007. "Executive compensation and non-financial risk: An empirical examination," Journal of Accounting and Public Policy, Elsevier, vol. 26(4), pages 436-462.
    14. Wen, Jun & Farooq, Umar & Tabash, Mosab I. & El Refae, Ghaleb A. & Ahmed, Jaleel & Subhani, Bilal Haider, 2021. "Government green environmental concerns and corporate real investment decisions: Does financial sector development matter?," Energy Policy, Elsevier, vol. 158(C).
    15. Tegarden, David P. & Sheetz, Steven D., 2003. "Group cognitive mapping: a methodology and system for capturing and evaluating managerial and organizational cognition," Omega, Elsevier, vol. 31(2), pages 113-125, April.
    16. Yorgos Rizopoulos & Dimitrios E Sergakis, 2010. "MNEs and policy networks: Institutional embeddedness and strategic choice," Post-Print halshs-01968233, HAL.
    17. Amon Chizema & Xiaohui Liu & Jiangyong Lu & Lan Gao, 2015. "Politically connected boards and top executive pay in Chinese listed firms," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 890-906, June.
    18. Tingko Lee & Wei‐Tsung Liu & Jun‐Xian Yu, 2021. "Does TMT composition matter to environmental policy and firm performance? The role of organizational slack," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(1), pages 196-213, January.
    19. Linda Thorne & Lois S. Mahoney & Kristen Gregory & Susan Convery, 2017. "A Comparison of Canadian and U.S. CSR Strategic Alliances, CSR Reporting, and CSR Performance: Insights into Implicit–Explicit CSR," Journal of Business Ethics, Springer, vol. 143(1), pages 85-98, June.
    20. Xie, Qunyong, 2017. "Firm age, marketization, and entry mode choices of emerging economy firms: Evidence from listed firms in China," Journal of World Business, Elsevier, vol. 52(3), pages 372-385.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wu, Huiying & Li, Sihai & Ying, Sammy Xiaoyan & Chen, Xuan, 2018. "Politically connected CEOs, firm performance, and CEO pay," Journal of Business Research, Elsevier, vol. 91(C), pages 169-180.
    2. Dongmin Kong & Junyi Xiang & Jian Zhang & Yiyang Lu, 2019. "Politically connected independent directors and corporate fraud in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(5), pages 1347-1383, March.
    3. Omneya Abdelsalam & Sabur Mollah & Emili Tortosa‐Ausina & Ahmed A. El‐Masry, 2025. "Do political connections matter for bank efficiency in times of crisis?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 602-625, January.
    4. Nguyen, Quan M.P. & Do, Hung Xuan & Molchanov, Alexander & Nguyen, Lily & Nguyen, Nhut H., 2023. "Political similarities in credit ratings," International Review of Financial Analysis, Elsevier, vol. 86(C).
    5. Zhi Wang & Geert Braam & Daniel Reimsbach & Jiaxin Wang, 2020. "Political embeddedness and firms’ choices of earnings management strategies in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(5), pages 4723-4755, December.
    6. Wong, Wai-Yan & Hooy, Chee-Wooi, 2018. "Do types of political connection affect firm performance differently?," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 297-317.
    7. Brahma, Sanjukta & Zhang, Jing & Boateng, Agyenim & Nwafor, Chioma, 2023. "Political connection and M&A performance: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 372-389.
    8. Liu, Li & Liu, Qigui & Tian, Gary & Wang, Peipei, 2018. "Government connections and the persistence of profitability: Evidence from Chinese listed firms," Emerging Markets Review, Elsevier, vol. 36(C), pages 110-129.
    9. repec:bla:germec:v:11:y:2010:i::p:441-464 is not listed on IDEAS
    10. Su, Zhong-qin & Xiao, Zuoping & Yu, Lin, 2019. "Do political connections enhance or impede corporate innovation?," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 94-110.
    11. Zengji Song & Abraham Nahm & Zongyi Zhang, 2015. "The value of partial state ownership in publicly listed private sector enterprises: evidence from China," Post-Communist Economies, Taylor & Francis Journals, vol. 27(3), pages 336-353, September.
    12. Yuxuan Li & Xin Miao & Dequan Zheng & Yanhong Tang, 2019. "Corporate Public Transparency on Financial Performance: The Moderating Role of Political Embeddedness," Sustainability, MDPI, vol. 11(19), pages 1-17, October.
    13. Chune Young Chung & Jung Hoon Byun & Jason Young, 2019. "Corporate Political Ties and Firm Value: Comparative Analysis in the Korean Market," Sustainability, MDPI, vol. 11(2), pages 1-25, January.
    14. Michelson, Noam, 2023. "The revolving door of former civil servants and firm value: A comprehensive approach," European Journal of Political Economy, Elsevier, vol. 79(C).
    15. Hao, Zhuoqun & Liu, Yu & Zhang, Jinfan & Zhao, Xiaoxue, 2020. "Political connection, corporate philanthropy and efficiency: Evidence from China’s anti-corruption campaign," Journal of Comparative Economics, Elsevier, vol. 48(3), pages 688-708.
    16. He, Lerong & Wan, Hong & Zhou, Xin, 2014. "How are political connections valued in China? Evidence from market reaction to CEO succession," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 141-152.
    17. Espenlaub, Susanne & Khurshed, Arif & Sitthipongpanich, Thitima, 2012. "Bank connections, corporate investment and crisis," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1336-1353.
    18. Wang, Fangjun & Xu, Luying & Zhang, Junrui & Shu, Wei, 2018. "Political connections, internal control and firm value: Evidence from China's anti-corruption campaign," Journal of Business Research, Elsevier, vol. 86(C), pages 53-67.
    19. Xie, Sujuan & Lin, Bingxuan & Li, Jingjing, 2022. "Political Control, Corporate Governance and Firm Value: The Case of China," Journal of Corporate Finance, Elsevier, vol. 72(C).
    20. López-Iturriaga, Félix J. & Santana Martín, Domingo Javier, 2019. "The payout policy of politically connected firms: Tunnelling or reputation?," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    21. Liu, Qigui & Tang, Jinghua & Tian, Gary Gang, 2013. "Does political capital create value in the IPO market? Evidence from China," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 395-413.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jmgtgv:v:29:y:2025:i:1:d:10.1007_s10997-024-09695-y. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.