Vol 16, No 4 (2022)

We investigate how different personal traits of a chief executive officer (CEO) influence value creation in one of the largest emerging capital markets in Russia. Our research model considers several components of human capital of a CEO.

Moreover, we include CEO’s behavioral biases looking at overconfidence measured by industry adjusted ratio of capital expenditures and narcissism captured by the analysis of CEO’s photos following previous academic research approaches. The CEO power is applied to understand its impact over value creation and possible mitigating effect. Our sample consists of 111 Russian publicly traded companies and 235 CEOs for 8 years (from 2013 to 2020). We apply economic profit criteria to measure corporate performance with economic value added (EVA) which captures the spread between actual return on capital derived from financial reports and overall cost of capital based on the risks of a company collected from Bloomberg .

We use first-order differences in company’s contribution to EVA after adjustments to the industry and overall market contributions to EVA for the sample. We find empirical evidence that CEO’s human capital affects value creation measured by first-order differences to industry adjusted EVA yearly. Furthermore, the CEO power has positive impact over value creation in Russian corporations while behavioral biases such as overconfidence ad narcissism do not have significant relationship with the changes in EVA.

In the past decade the society grew more interested in corporate operations concerning environmental, social, and corporate governance (ESG). This paper is dedicated to study of influence of CEO’s personal characteristics on financial performance of companies and interrelation between ESG indicators and corporate financial performance. For this purpose
we have conducted a review of scientific literature on this topic, established interrelation between financial indicators and ESG indicators, determined the main characteristics which influence corporate financial indicators. For this purpose we developed a model of CEO’s personal characteristics. The paper studied characteristics of CEOs from Russian companies, compiled a rating of CEOs taking into consideration financial and ESG indicators of companies, considered influence of the CEO’s position in this overall rating on financial
indicators of a company.

The research sample comprises 81 Russian companies of the real sector which are in the Moscow Exchange index and 123 CEOs. The time interval covered by this research is seven years since 2013 to 2019. Analysis was performed in the statistics package STATA applying panel data analysis as a method. Return on assets, return on equity and the market capitalization
indicator were used as dependent variables. We chose disclosure of ESG information by a company, CEO’s score in the overall rating and such CEO’s characteristics as age, tenure and financial education as explicative variables. Financial leverage and company size were used as control variables. We also added return on assets to some model specifications in
order to improve the model quality.

The worldwide growth in the level of corporate cash holding has prompted scholarly interest. Grounded on the precautionary motive of cash, we aim to provide a behavioural explanation to this phenomenon by exploring the relation between CEO age and corporate cash holdings. We further examine the institutional factor that may exert an influence on this relationship through a country’s legal systems, based on the notion that business corporations are part and parcel of the nexus of the institutions. Using an international sample of 24,989 firms from 90 countries, we find that CEO age is positively associated with the level of cash holdings. The positive impact is weakened when firms operate in countries with greater investor protection and better financial development. We demonstrate that older CEOs from common law, German law and post-socialist countries have a propensity to hold less cash. Additional robustness test supports our empirical findings.

In recent years researchers have been paying significant attention to Environmental, Social, Governance (ESG) principles as a crucial factor in company performance. This paper aims to summarize the trends and findings in academic literature devoted to the board of directors as a determinant of ESG performance and non-financial disclosure quality. This paper also summarizes the key findings for a board’s moderating effects on the impact of ESG on corporate financial performance. The results of qualitative analysis of more than 70 empirical papers demonstrate that board independence is the most widely considered parameter, interpreted as a positive factor for strengthening a board’s monitoring function according to agency theory. There is no consensus on board size: larger boards include directors who represent the interests of a wider range of stakeholders (stakeholder theory), however, the increase in board size leads to a complication
of decision-making and controlling processes. Researchers mostly agree that an augmentation of women’ and foreigners’ representation among directors positively affects ESG performance and disclosure quality, although the lack of critical mass may dilute this effect. As for CEO’s role in the board, while some researchers argue that CEO duality enhances agency conflict, deterring corporate transition to ESG, other authors claim that a CEO’s organizational power may enhance the ESG transition due to a faster implementation of board decisions. One of the crucial determinants for this effect is the board members’ diversified professional expertise, including specialized education and experience, for the effective monitoring of managers’ performance. Finally, there is a growing interest in the role of board sustainability committees,
which accumulate the required professional expertise for developing environmental and social strategies (resource-based theory). By examining the key board characteristics’ effect on corporate ESG performance and disclosure quality, this paper contributes to corporate governance literature, expanding the field for further research. Moreover, the paper highlights several understudied issues for further research.