This study aims to examine the impact of Chief Executive Officer (CEO) characteristics on carbon emissions disclosure in Indonesian firms using the upper-echelon theory. CEO characteristics investigated in this study include CEO tenure, education, gender and nationality.
This study uses a sample of 768 Indonesian firms from 2018 to 2021 that yields 2,323 firm-years of observation. The data are gathered manually from company reports. The association between CEO characteristics and carbon emissions disclosure is investigated using regression analysis with panel data.
This study finds that a shorter tenure of the CEO results in a higher level of carbon emissions disclosure. In terms of education, this study finds that CEO with an accounting or business educational background will present more carbon emissions information than CEO with other educational backgrounds. In addition, local or domestic CEO tends to disclose more carbon emissions information than foreign CEO. On the other hand, the extent of carbon emissions disclosure does not depend on the educational level or the gender of the CEO.
This study suggests that Indonesian companies implement a year-limited tenure of the CEO to ensure the governance systems are effective in addressing companies’ issues and risks. In addition, the companies are suggested to consider appointing a CEO who has an accounting or business educational background to tackle environmental issues such as carbon emissions. Companies are recommended to hire a local or domestic CEO rather than a foreign CEO because of their knowledge about the business environment and sustainability regulations in Indonesia.
In the literature, there are limited studies investigating CEO characteristics on carbon emissions disclosure because previous studies dominantly examine stakeholder pressures, ownership structure and governance. Hence, this study provides empirical evidence about the relationship between CEO characteristics that include tenure, education, gender and nationality and carbon emissions disclosure.
