CEO Characteristics and Environmental Performance: Evidence from Indonesian Banks

Authors

  • Nurmadi Harsa Sumarta Doctoral Student of Environmental Science, Universitas Sebelas Maret
  • Muhammad Agung Prabowo Faculty of Economics and Business, Universitas Sebelas Maret
  • Prihatnolo Gandhi Amidjaya Faculty of Economics and Business, Universiti Malaysia Sarawak
  • Edy Supriyono Faculty of Economics and Business, Universitas Sebelas Maret
  • Agista Putri Prameswari Center for Fintech and Banking, Universitas Sebelas Maret

DOI:

https://doi.org/10.33736/ijbs.3779.2021

Keywords:

Environmental Performance, CEO Characteristics, Gender, Age, Expertise, International Experience

Abstract

Following the paradigm shift of company performance, from merely financial aspects to the balance between economics and environmental aspects, a study that explores the drivers of company environmental performance is indispensable. This study aims to empirically examine the role of CEO characteristics in determining the environmental performance from CEO's gender, age, expertise, and international experience in Indonesian banks. We use secondary data from banks' annual and sustainability reports that were analysed using panel data regression. The results demonstrate that CEO's international experience and education level positively affect bank's environmental performance while foreign CEO and CEO's abroad study exhibit negative effect. Our findings emphasise that CEO plays a great role in initiating banks' environmental activities. CEO's decision is crucial to adopt environmental practice that leads to better environmental performance. The study contributes to the Indonesian literature by providing empirical evidence of CEO factors in determining banks' environmental performance, in which there are very limited studies examining the role of CEO. We also suggest the Indonesian Financial Service Authority to encourage banks to deliver higher environmental contribution by maximizing the role of CEO.

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Published

2021-08-12

How to Cite

Nurmadi Harsa Sumarta, Muhammad Agung Prabowo, Prihatnolo Gandhi Amidjaya, Edy Supriyono, & Agista Putri Prameswari. (2021). CEO Characteristics and Environmental Performance: Evidence from Indonesian Banks. International Journal of Business and Society, 22(2), 1015–1033. https://doi.org/10.33736/ijbs.3779.2021