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Top1. Introduction
Self-interest is a general trait of CEOs, and too much altruism can harm firm performance (Takacs Haynes, Campbell, & Hitt, 2017). This reveals some businesses’ dark and self-destructive propensities and presents an opportunity to correlate greed, egotism, and firm performance (financial and non-financial). Further, empirics have highlighted the consequences of CEO greed, and firms led by greedy CEOs suffer severe consequences (Francoeur, Melis, Gaia, & Aresu, 2017). In the current study, CEO greed refers to an intense and selfish desire for wealth, supporting the researchers’ view that more greedy CEOs are less concerned with environmental performance (hereafter EP). During the last few decades, the governance monitoring role and firms’ EP have become imperative for stakeholders. Therefore, the search for rising yields in environmentally-sensitive organizations will probably coexist with improved governance and EP practices (Cheng et al., 2014). Environment strategy requires the resolution of scientific and engineering problems, and the solution could be costly and may temper short-run performance (Schrettle, Hinz, Scherrer-Rathje, & Friedli, 2014).
Therefore, a key factor can be how firms make decisions that affect the EP, and in this context, it is vital to understand how a greedy CEO influences corporate choices. Based on the Upper Echelon viewpoint, we stated that firms managed by greedy CEO are likely to be associated with poor EP, as EP represents a long-term-oriented strategic choice with limited instant return (Shou, Shao, Lai, Kang, & Park, 2019). Since CEO greed is associated with short-run profits (Haynes, Josefy, & Hitt, 2015), they are more likely to neglect EP. Likewise, executive behavior correlates with intrinsic and extrinsic motives (Wowak, Gomez-Mejia, & Steinbach, 2017)); we hypothesize that CEO greed and CSR relation are subject to the type of CEO pay measures (Wowak & Hambrick, 2010). Agency theory predicts that economic motivations are an influential tool for controlling CEOs’ emphasis on stakeholders’ essentials (Sajko, Boone, & Buyl, 2021). As the material gain is a promise of greed (Wang & Murnighan, 2011), we also propose that the willingness of greedy CEOs to opt for EP as a strategic choice is mainly sensitive to pay arrangements, like bonuses and restricted stocks. We empirically tested the negative role of CEO greed in EP, and our results supported the view. We also found that EP is highly sensitive to pay arrangements as a strategic choice. We found that bonus augments the CEO greed and EP negative relation in both coefficient and level of significance.
In contrast, restricted stocks weaken the relation in terms of coefficient only. Further, the negative relation is more pronounced when CEOs exercise powers (CEO duality and CEO compliance board). Our study contributes to the existing literature by providing evidence regarding CEO greed and EP performance in environmentally sensitive sectors of Chinese manufacturing firms. Our study contributes to the literature on the drivers of CEO behavior in the context of EP (Busenbark, Krause, Boivie, & Graffin, 2016). We integrated the Upper Echelon viewpoint and agency model to predict why and how the CEO shapes firms’ EP profiles and responded to calls to integrate CEO’s motives (pecuniary and non-pecuniary) as antecedents of firm strategic choices (Wowak et al., 2017).