Great power involves great (environmental) responsibility? Founder CEOs and corporate carbon emissions

Abstract

Abstract

Purpose The principal causes of carbon emissions and global warming are anthropogenic. Business executives with substantial power can be instrumental in addressing this global challenge. This paper aims to estimate the effect of founder CEOs, believed to have more long-term orientation and decision-making power than their nonfounding peers, on corporate carbon emissions. In addition, this paper analyzes the moderating effects of internal governance and external institutional environments. Design/methodology/approach Using a panel dataset of Chinese A-share listed firms from 2009 to 2023, this paper conducts empirical tests on the above relationships. Multiple methods are used to ensure robustness, including propensity score matching, staggered difference-in-differences, parallel trend test and system GMM. Findings The results show that founder CEOs significantly reduce corporate carbon emission intensity compared with professional CEOs. This carbon reduction effect is stronger when founder CEOs have an environmental background, receive higher compensation or hold larger equity stakes. Externally, the effect is amplified in firms located in regions with weaker environmental regulation, lower disclosure transparency, higher short-term institutional ownership and in high-pollution industries. Originality/value To the best of the authors’ knowledge, this paper is the first to examine the impact of founder CEOs on corporate carbon emissions, extending upper echelons theory by demonstrating that the long-term vision and structural decision-making power associated with founder status can enhance firms’ environmental governance capabilities. This effect is particularly salient in emerging markets such as China, where external governance institutions are relatively weak, emphasizing that greater power entails greater responsibility.