Economic Expertise In Leadership : How CEO Economic Certifications Drive Corporate EES Performance

Rosyadatul  Ulufiyah; Iman  Harymawan

doi:10.33395/owner.v9i2.2663

Authors

Rosyadatul Ulufiyah Universitas Airlangga
Iman Harymawan Universitas Airlangga

DOI:

10.33395/owner.v9i2.2663

Keywords:

CEO Economic Certification; Corporate Governance; Sustainability Performance; Upper Echelons Theory

Abstract

This study examines the relationship between CEO economic certifications and corporate sustainability performance, particularly in environmental, economic, and social (EES) aspects. Using a dataset of non-financial companies listed on the Indonesia Stock Exchange (IDX) from 2016 to 2021, the study applies Upper Echelons Theory to explore how CEO economic expertise influences strategic decision-making and corporate sustainability outcomes. The results show a significant positive correlation between CEO economic certification and EES Scores, suggesting that CEOs with economic backgrounds are more adept at implementing sustainability strategies, optimizing resource management, and improving corporate transparency. The findings also emphasize the increasing regulatory and market-driven expectations for corporate sustainability in Indonesia, particularly under frameworks such as POJK 51/2017. Despite the positive relationship, challenges remain in fully integrating sustainability principles across industries. The study provides implications for corporate governance, regulatory bodies, and investors seeking to enhance corporate sustainability through executive leadership.

Downloads

Download data is not yet available.

Plum-X Analityc

References

Abatecola, G., & Cristofaro, M. (2019). Ingredients of Sustainable CEO Behaviour?: Theory and Practice. Sustainability, 11(7). https://doi.org/10.3390/su11071950

Adhariani, D., & Du Toit, E. (2020). Readability of Sustainability Reports?: Evidence From Indonesia. Journal of Accounting in Emerging Economies, 10(4), 621–636. https://doi.org/10.1108/JAEE-10-2019-0194

Adhikari, H. P., Krolikowski, M. W., Malm, J., & Sah, N. B. (2021). Working Capital Management-Impact of Executive Age. Accounting & Finance, 61(1), 727–761. https://doi.org/10.1111/acfi.12591

Ali, R., Rehman, R. U., Suleman, S., & Ntim, C. G. (2022). CEO Attributes, Investment Decisions and Firm Performance?: New Insights From Upper Echelons Theory. Managerial and Decision Economics, 398–417. https://doi.org/10.1002/mde.3389

Alsayegh, M. F. , Abdul Rahman, R., & Homayoun, S. (2020). Corporate Economic, Environmental and Social Sustainability Performance Transformation Through ESG Disclosure. Sustainability, 12(9). https://doi.org/10.3390/su12093910

Anessi-Pessina, E., & Sicilia, M. (2020). Do Top Managers’ Individual Characteristics Affect Accounting Manipulation in The Public Sector?? Journal of Public Administration Research and Theory. Journal of Public Administration Research, 30(3), 465–484. https://doi.org/10.1093/jopart/muz038

Atayah, O. F., Najaf, K., Subramaniam, R. K., & Chin, P. N. (2022). The Ascension of Executives Tenure, Corporate Risk-Taking and Corporate Performance?: Evidence From Malaysia. Journal of Business Administration, 14(1), 101–123. https://doi.org/10.1108/APJBA-05-2021-0189

Belenzon, S., Shamshur, A., & Zarutskie, R. (2019). CEO’S Age And The Performance Of Closely Held Firms. Strategic Management Journal, 40(6), 917–944. https://doi.org/10.1002/smj.3003

Bennedsen, M., Perez-Gonzalez, F., & Wolfenzon, D. (2020). Do CEOs Matter?? Evidence From Hospitalization Events. The Journal of Finance, 75(4), 1877–1911. https://doi.org/10.1111/jofi.12897

Blank, D. B., & Hadley, B. (2021). When CEOs Adapt?: An Investigation of Manager Experience, Policy and Performance Following Recessions. Journal of Corporate Finance, 71. https://doi.org/10.1016/j.jcorpfin.2021.102118

Bolis, I., Morioka, S. N., Leite, W. K. dos S., & Zambroni-de-Souza, P. C. (2021). Sustainability Is All About Values?: The Challenges of Considering Moral and Benefit Values in Business Model Decisions. Sustainability, 13(2). https://doi.org/10.3390/su13020664

Camilleri, M. A. (2022). Strategic Attributions of Corporate Social Responsibility and Environmental Management?: The Business Case for Doing Well by Doing Good. Sustainable Development, 30(3), 409–422. https://doi.org/10.1002/sd.2256

Campos-Garcia, I., & Zuniga-Vicente, J. A. (2019). The Impact of a Leader’s Demographic And Professional Characteristics on Employee Motivation. Employee Relations, 41(1), 119–141. https://doi.org/10.1108/ER-10-2017-0253

Cha, W., Abete, M., & Dadanlar, H. (2019). The Effect of CEO Civic Engagement on Corporate Social and Environmental Performance. Social Responsibility Journal, 15(8), 1054–1070. https://doi.org/10.1108/SRJ-05-2018-0122

Chang, W. F., Amran, A., Iranmanesh, M., & Foroughi, B. (2019). Drivers of Sustainability Reporting Quality?: Financial Institution Perspective. International Journal of Ethics and Systems, 2019, 632–650. https://doi.org/10.1108/IJOES-01-2019-0006

Costa, J., Padua, M., & Moreira, A. C. (2023). Leadership Styles and Innovation Management?: What is the Role of Human Capital?? Administrative Sciences, 13(2), 47. https://doi.org/10.3390/admsci13020047

Eide, A. E., Saether, E. A., & Aspelund, A. (2020). An Investigation of Leaders’ Motivation, Intellectual Leaderhip, and Sustainability Strategy In Relation To Norwegian Manufactures’ Performance. Journal of Cleaner. https://doi.org/10.1016/j.jclepro.2020.120053

Garcia-Blandon, J., Argiles-Bosch, J. M., & Ravenda, D. (2019). Exploring The Relationship Between CEO Characteristics And Performance. Journal of Business Economics and Management, 20(6), 1064–1082. https://doi.org/10.3846/jbem.2019.10447

Garcia-Sanchez, I., Aibar-Guzman, B., Aibar-Guzman, C., & Azvedo, T. (2020). CEO Ability And Sustainability Disclosures?: The Mediating Effect of Corporate Social Responsibility Performance. Corporate Social Responsibility And Environmental Management, 1565–1577. https://doi.org/10.1002/csr.1905

Ghardallou, W. (2022). Corporate Sustainability and Firm Performance?: The Moderating Role of CEO Education and Tenure. Sustainability, 14(6), 3513. https://doi.org/10.3390/su14063513

Gupta, N., & Mahakud, J. (2020). CEO Characteristics and Bank Performance?: Evidence From India. Managerial Auditing Journal, 35(8), 1057–1093. https://doi.org/10.1108/MAJ-03-2019-2224

Gutierrez-Ponce, H., & Wibowo, S. A. (2023). Do Sustainability Activities Affect The Financial Performance of Banks?? The Case of Indonesian Bank. Sustainability, 15–18. https://doi.org/10.3390/su15086892

Harymawan, I., Nasih, M., Agustia, D., Ratri, M., & Nowland, J. (2020). CEO & CFO Education and R&D Investment in Indonesia. Australasian Accounting, Business and Finance Journal, 14(2), 16–34. https://doi.org/10.14453/aabfj.v14i2.3

Hewa Heenipellage, A., Fernando, M., & Gibbons, B. (2022). Upper Echelon Characteristics and Environmental Sustainability Practices?: Evidence From Upper Echelons In The Hotel Industry. Journal of Cleaner Production. https://doi.org/10.1016/j.jclepro.2022.134618

Hu, J., & Dutta, T. (2022). What’s Charisma Got To Do With It?? Three Faces of Charismatic Leadership And Corporate Social Responsibility Engagement. Frontiers in Psychology. https://doi.org/10.3389/fpsyg.2022.829584

Huang, P., Gao, J., Cai, W., & Gu, F. (2023). Do Professionals Really Matter?? Top Executive Legal Expertise And Firm Lawsuits. Chinese Management Studies, 18(4), 1232–1254. https://doi.org/10.1108/CMS-06-2022-0215

Ismail, N., Anridho, N., MD, I. M. A., Abd Rahman, N. H., & Ismail, N. (2022). Corporate Sustainability and Firms’ Financial Performance?: Evidence From Malaysian and Indonesian Public Listed Companies. International Journal of Economics and Management, 16(2), 213–224. https://doi.org/10.47836/ijeam_16.2.05

Jumita, S., Taufiq, T., & Yusnaini, Y. (2020). Sustainability Reporting as Mediation of Factors Affecting Financial Performance?: Case In The Mining Sector in Indonesia. Accounting and Finance, 4(90), 30–37. https://doi.org/10.33146/2307-9878-2020-4(90)-30-37

Kaur, R., & Singh, B. (2019). Do CEO Characteristics Explain Firm Performance in India?? . Journal of Strategy and Management, 12(3), 409–426. https://doi.org/10.1108/JSMA-02-2019-0027

Li, M., & Yang, J. (2019). Effects of CEO duality and Tenure On Innovation. Journal of Strategy and Management, 12(4), 536–552. https://doi.org/10.1108/JSMA-04-2019-0049

Li, Y., Xu, X., Zhu.Y, & Haq, M. (2021). CEO Decision Horizon and Corporate Investments: An Explanation Based on Mangerial Myopia And Risk Aversion. Accounting & Finance, 61(4), 5141–5175. https://doi.org/10.1111/acfi.12752

Lombardi, R., Tiscini, R., Trequattrini, R., & Martiniello, L. (2020). Strategic Entrepreneurship. Management Decision, 59(5), 1069–1084. https://doi.org/10.1108/MD-10-2019-1416

Luque-Vilchez, M., Mesa-Perez, E., Husillos, J., & Larrinaga, C. (2019). The Influence of Proenvironmental Managers’ Personal Values on Environmental Disclosure. Sustainability Accounting,Management and Policy Journal, 10(1), 41–61. https://doi.org/10.1108/SAMPJ-01-2018-0016

Ma, Z., Zhang, H., Zhong, W., & Zhou, K. (2020). Top Management Teams’ Academic Experience and Firms’ Corporate Social Responsibility Voluntary Disclosure. Management And Organization Review, 16(2), 293–333. https://doi.org/10.1017/mor.2019.58

Mahran, K., & Elamer, A. A. (2024). Chief Executive Officer (CEO) and Corporate Environmental Sustainability?: A Systematic Literature Review and Avenues For Future Research. Business Strategy and The Environment, 33(3), 1977–2003. https://doi.org/10.1002/bse.3577

Nadae, J. De, Carvalho, M. M., & Vieira, D. R. (2019). Exploring The Influence of Environmental and Social Standards in Integrated Management Systems on Economic Perfomance of Firms. Journal of Manufacturing Technology Management, 30(5), 840–861. https://doi.org/10.1108/JMTM-06-2018-0190

Naseem, M. A., Lin, J., Rehman, R., Ahmad, M. I., & Ali, R. (2020). Does Capital Structure Mediate The Link Between CEO Characteristics and Firm Performance?? Management Decision, 58(1), 164–181. https://doi.org/10.1108/MD-05-2018-0594

Neely, B. H., Lovelace, J. B., Cowen, A. P., & Hiller, N. J. (2020). Metacritiques of Upper Echelons Theory?: Verdicts and Recoommendations for Future Research. Journal of Management, 46(6), 1029–1062. https://doi.org/10.1177/0149206320908640

Ngelo, A. A., Permatasari, Y., Rasid, S. Z. A., Harymawan, I., & Ekasari, W. F. (2022). Ex-Auditor CEOs and Corporate Social Responsibility (CSR) Disclosure?: Evidence From A Voluntary Periode of Sustainability Report in Indonesia. Sustainability, 14(18). https://doi.org/10.3390/su141811418

Permatasari, P., & Gunawan, J. (2023). Sustainability Policies For Small Medium Enterprises?: WHO Are The Actors?? Cleaner and Responsible Consumption, 9. https://doi.org/10.1016/j.clrc.2023.100122

Prisandani, U. Y. (2023). Public Companies and Sustainability Through Regulatory Reform In Indonesia. International Journal of Environmental Studies, 80(1), 32–50. https://doi.org/10.1080/00207233.2021.2017182

Pryor, C., Holmes, R. M., Webb, J. W., & Liguori, E. W. (2019). Top Executive Goal Orientations’ Effects on Environmental Scanning and Performance?: Differences Between Founders and Nonfounders. Journal of Management, 45(5), 1958–1986. https://doi.org/10.1177/0149206317737354

Raza-Ullah, T., Stadtler, L., & Fernandez, A.-S. (2023). The Individual Manager In The Spotlight Protecting Sensitive Knowledge In Inter-Firm Competion Relationships. Industrial Marketing Management, 110, 85–95. https://doi.org/10.1016/j.indmarman.2023.02.012

Ribhan, R., Rusdi, Z. M., & Erlina, R. R. (2024). Analysis of CEO Characteristics on Sustainability Development in Mining Companies in Indonesia. WSEAS Transactions on Business And Economics, 21, 1362–1369. https://doi.org/10.37394/23207.2024.21.111

Santika, T., Wilson, K. A., Law, E. A., St.John, F. A. V., Carlson, K. M., Gibbs, H., Morgans, C. L., Ancrenaz, M., Meijaard, E., & Struebig, M. J. (2020). Impact of Palm Oil Sustainability Certification On Village Well-Being and Poverty in Indonesia. Nature Sustainability, 4(2), 109–119. https://doi.org/10.1038/s41893-020-00630-1

Saraswati, E., Ghofar, A., Atmini, S., & Dewi, A. A. (2024). Clustering of Companies Based on Sustainability Performance Using ESG Materiality Approach?: Evidence From Indonesia. International Journal of Energy Economics and Policy, 14(2), 112–125. https://doi.org/10.32479/ijeep.15393

Setiawan, D., Harymawan, I., Adhariani, D., Pratama, F. A. F., & Santoso, A. (2024). Does The Leverage of a Company Differ When LEd By a CEO From A Reputable University?? . Journal of Open Innovation, 10(2). https://doi.org/10.1016/j.joitmc.2024.100310

Setyowati, A. B. (2023). Governing Sustainable Finance?: Insights From Indonesia. Climate Policy, 23(1), 108–121. https://doi.org/10.1080/14693062.2020.1858741

Sidhu, J. S., Heyden, M. L. M., Volberda, H. W., & Van Den Bosch, F. A. J. (2019). Experience Make The Mind?? Top Management Teams’Experiental Background And Cognitive Search For Adaptive Solutions. Industrial and Corporate Change. https://doi.org/10.1093/icc/dtz041

Steinbach, A. L., Gamache, D. L., & Johnson, R. E. (2019). Don’t Get It Misconstrued?: Executive Construal-Level Shifts and Flexibility In The Upper Echelons. Academy of Management Review, 44(4), 871–895. https://doi.org/10.5465/amr.2017.0273

Sugiarto, A., Puspani, N. N., & Fathia, F. (2023). ESG Leverage Towards Stock Performance in Indonesia Stock Exchange. International Journal of Energy Economics and Policy, 13(5), 593–606. https://doi.org/10.32479/ijeep.14384

Sumarta, N. H., Prabowo, M. A., Amidjaya, P. G., Supriyono, E., & Prameswari, A. P. (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

Taliento, M., Favino, C., & Netti, A. (2019). Impact of Environmental, Social and Governance Information on Economic Performance?: Evidence of a Corporate “Sustainability Advantage” From Europe. Sustainability, 11(6), 1738. https://doi.org/10.3390/su11061738

Tjahjadi, B., Soewarno, N., & Mustikaningtiyas, F. (2021). Good Corporate Governance and Corporate Sustainability Performance in Indonesia?: A Triple Bottom Line Approach. Heliyon, 7(3). https://doi.org/10.1016/j.heliyon.2021.e06453

Tran, T. K. (2023). Leadership and The Company’S Willingness To Take Risks?: Empirical Analysis In Vietnam . Journal of Open Innovation?:T Echnology, Market and Complexity, 9(3). https://doi.org/10.1016/j.joitmc.2023.100138

White, J. V., & Borgholthaus, C. J. (2022). Who’s in Charge Here?? A Bibliometric Analysis of Upper Echelons Research. Journal of Business Research, 139, 1012–1025. https://doi.org/10.1016/j.jbusres.2021.10.028