Optimizing Business Strategy for Sustainability: Probing the Effects of CEO Features, and Corporate Reputation in Driving ESG Outcomes

Abstract

Anchored in signaling and stakeholder theories, this study investigates the influence of CEO characteristics on environmental, social, and governance (ESG) disclosure, with a focus on the moderating roles of corporate reputation and sustainable innovation. The analysis covers the period 2013 to 2023, using a panel dataset of 368 manufacturing firms in emerging markets, particularly the Latin America and the Caribbean (LAC) region, firms across the region. To empirically test the hypotheses and address potential endogeneity, reverse causality, and dynamic firm behavior, the study employs dynamic GMM modeling. In addition, Quantile Regression (QR) is applied to uncover heterogeneous effects across varying levels of ESG disclosure. The results reveal that CEO foreign experience, compensation, interlocks, and education have a positive and significant influence on ESG disclosure, while CEO power shows a negative and significant effect. The study further finds that corporate reputation not only directly enhances ESG disclosure but also strengthens the relationship between CEO characteristics and sustainability reporting. Similarly, the interaction effect of sustainable innovation is positively associated with ESG disclosure, indicating that innovation efforts amplify the influence of CEO attributes on transparency. QR analysis reveals that these effects are pronounced in higher quantiles. Finally, the study uncovers additional layers of heterogeneity driven by global climate agreements, economic development levels, and regional dynamics within LAC. The study contributes to ESG, leadership, and corporate governance literature by offering a nuanced, multilevel perspective on sustainability disclosure, with practical implications for boards, regulators, and policymakers seeking to foster transparency and accountability in developing regions.