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The impact of CEO tenure on corporate social and environmental performance: an emerging country’s analysis

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Abstract

This paper analyzes the extent to which CEO (chief executive officer) tenure affects the corporate social and environmental performance of all nonfinancial Chinese firms listed in Shanghai and Shenzhen stock exchanges during 2009–2015. The study uses a fixed-effect panel regression model by considering the overtime data across the firms. 2SLS regression model then is used to control the problem of endogeneity. The study confirms the negative effect (8.8%) of the increase in CEO tenure on the corporate social and environmental performance. The findings also explain that the corporate social and environmental performance of CEOs increases significantly in the initial years of service than in their later years. The study concludes that an inverse relationship between CEO tenure and corporate social and environmental performance is more pronounced with a higher percentage of independent directors, where CEOs have longer anticipated employment tenure and firms under state control, consistent with the signalling explanation of career concern and career horizon effect. Finally, the impact of CEO tenure on corporate social and environmental performance has become stronger in recent years.

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Authors and Affiliations

  1. School of Finance, Southwestern University of Finance and Economics, Chengdu, China

    Talat Mehmood Khan & Bai Gang

  2. School of Business, Huzhou University, Huzhou, Zhejiang, China

    Zeeshan Fareed

  3. School of International Business, Southwestern University of Finance and Economics, Chengdu, China

    Rizwana Yasmeen

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  1. Talat Mehmood Khan
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  2. Bai Gang
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  3. Zeeshan Fareed
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  4. Rizwana Yasmeen
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Correspondence to Talat Mehmood Khan.

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Table 11 Variables explanation
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Khan, T.M., Gang, B., Fareed, Z. et al. The impact of CEO tenure on corporate social and environmental performance: an emerging country’s analysis. Environ Sci Pollut Res 27, 19314–19326 (2020). https://doi.org/10.1007/s11356-020-08468-y

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