When Celebrity CEOs Undermine Sustainability Value:  Evidence from Indonesian Firms

Dwi Nova Wijaya; Wendy  Wendy; Helma  Malini

doi:10.14414/jebav.v27i2.4302

Vol. 27 No. 2 (2024), Articles

Vol. 27 No. 2 (2024)

When Celebrity CEOs Undermine Sustainability Value: Evidence from Indonesian Firms

Articles

DOI: 10.14414/jebav.v27i2.4302

Published 29-11-2024

Dwi Nova Wijaya⁺⁻
Wendy Wendy⁺⁻
Helma Malini⁺⁻

Dwi Nova Wijaya

Tanjungpura University, Pontianak, West Kalimantan, Indonesia

Wendy Wendy

Tanjungpura University, Pontianak, West Kalimantan, Indonesia

Helma Malini

Tanjungpura University, Pontianak, West Kalimantan, Indonesia

pdf

Keywords

Firm value
Corporate sustainability
Celebrity CEO

How to Cite

Wijaya, D. N., Wendy, W. ., & Malini, H. . (2024). When Celebrity CEOs Undermine Sustainability Value: Evidence from Indonesian Firms. Journal of Economics, Business, and Accountancy Ventura, 27(2), 156-167. https://doi.org/10.14414/jebav.v27i2.4302

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Abstract

This research investigates the moderating effect of celebrity CEOs on the relationship between corporate sustainability and firm value. A quantitative approach was utilized, analyzing data from 51 companies listed on the Indonesia Stock Exchange from 2014 to 2021 using regression analysis. While prior studies have explored the individual effects of either celebrity CEOs or corporate sustainability on firm value, this study addresses a gap by examining the interaction between these factors and its impact on firm value. The results reveal that although both the presence of a celebrity CEO and the implementation of corporate sustainability initiatives can enhance firm value, they do not necessarily create a beneficial synergy. In fact, the presence of a celebrity CEO may diminish the positive effects of corporate sustainability on firm value. These findings provide empirical evidence suggesting that companies should carefully assess the alignment between a CEO’s characteristics and the firm’s sustainability strategies to optimize value creation. The study underscores the importance of selecting a CEO whose attributes align with the company’s long-term sustainability objectives. These insights have practical implications for corporate management in making strategic decisions regarding CEO appointments and the execution of sustainability initiatives.

References

Agnihotri, A., & Bhattacharya, S. (2019). CEO Narcissism and Internationalization by Indian Firms. Management International Review, 59(6), 889-918. https://doi.org/10.1007/s11575-019-00404-8

Bao, X., Sun, B., Han, M., Lin, H., & Lau, R. Y. K. (2023). Quantifying the Impact of Ceo Social Media Celebrity Status on Firm Value: Novel Measures from Digital Gatekeeping Theory. Technological Forecasting and Social Change, 189. https://doi.org/10.1016/j.techfore.2023.122334

Baumgartner, R. J. (2014). Managing Corporate Sustainability and CSR: A Conceptual Framework Combining Values, Strategies and Instruments Contributing to Sustainable Development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271. https://doi.org/10.1002/csr.1336

Benjamin, S. J., & Biswas, P. K. (2022). Does winning a CSR Award increase firm value? International Journal of Disclosure and Governance, 19(3), 313-329. https://doi.org/10.1057/s41310-022-00142-8

Bi, W., Wang, Y., Xiang, Y., & Zhang, F. (2022). CEO facial trustworthiness and corporate governance. China Accounting and Finance Review, 24(4), 516-539. https://doi.org/10.1108/cafr-03-2022-0016

There are 55 references. More references >>

Agnihotri, A., & Bhattacharya, S. (2019). CEO Narcissism and Internationalization by Indian Firms. Management International Review, 59(6), 889-918. https://doi.org/10.1007/s11575-019-00404-8

Bao, X., Sun, B., Han, M., Lin, H., & Lau, R. Y. K. (2023). Quantifying the Impact of Ceo Social Media Celebrity Status on Firm Value: Novel Measures from Digital Gatekeeping Theory. Technological Forecasting and Social Change, 189. https://doi.org/10.1016/j.techfore.2023.122334

Baumgartner, R. J. (2014). Managing Corporate Sustainability and CSR: A Conceptual Framework Combining Values, Strategies and Instruments Contributing to Sustainable Development. Corporate Social Responsibility and Environmental Management, 21(5), 258-271. https://doi.org/10.1002/csr.1336

Benjamin, S. J., & Biswas, P. K. (2022). Does winning a CSR Award increase firm value? International Journal of Disclosure and Governance, 19(3), 313-329. https://doi.org/10.1057/s41310-022-00142-8

Bi, W., Wang, Y., Xiang, Y., & Zhang, F. (2022). CEO facial trustworthiness and corporate governance. China Accounting and Finance Review, 24(4), 516-539. https://doi.org/10.1108/cafr-03-2022-0016

Braun, A. (2022). The Elon Musk experience: celebrity management in financialised capitalism. Celebrity Studies, 1-18. https://doi.org/10.1080/19392397.2022.2154685

Brenner, P. S., Serpe, R. T., & Stryker, S. (2014). The Causal Ordering of Prominence and Salience in Identity Theory: An Empirical Examination. Soc Psychol Q, 77(3), 231-252. https://doi.org/10.1177/0190272513518337

Chahyadi, C., Doan, T., & Eduardo, B. (2023). Celebrity CEOs and financial statement readability. International Journal of Governance and Financial Intermediation, 1(4), 351-368.

Chang, Y.-J., & Lee, B.-H. (2022). The Impact of ESG Activities on Firm Value: Multi-Level Analysis of Industrial Characteristics. Sustainability, 14(21). https://doi.org/10.3390/su142114444

Cohen, J. (2013). Statistical power analysis for the behavioral sciences. routledge.

Corte, M. A. B. (2020). How social media usage by managers affects corporate value: the case of Elon Musk

Di Maria, F., Sisani, F., Contini, S., Ghosh, S. K., & Mersky, R. L. (2020). Is the policy of the European Union in waste management sustainable? An assessment of the Italian context. Waste Manag, 103, 437-448. https://doi.org/10.1016/j.wasman.2020.01.005

Ding, D. K., Ferreira, C., & Wongchoti, U. (2016). Does it pay to be different? Relative CSR and its impact on firm value. International Review of Financial Analysis, 47, 86-98. https://doi.org/10.1016/j.irfa.2016.06.013

Eccles, R. G., Ioannou, I., & Serafeim, G. (2014). The Impact of Corporate Sustainability on Organizational Processes and Performance. Management Science, 60(11), 2835-2857. https://doi.org/10.1287/mnsc.2014.1984

Elkington, J. (1998). Partnerships from Cannibals with Forks: The Triple Bottom Line of 21st-Century Business. John Wiley & Sons, Inc.

Erhemjamts, O., Li, Q., & Venkateswaran, A. (2013). Corporate Social Responsibility and Its Impact on Firms' Investment Policy, Organizational Structure, and Performance. Journal of Business Ethics, 118(2), 395-412. http://www.jstor.org/stable/42922001

Etikan, I. (2016). Comparison of Convenience Sampling and Purposive Sampling. American Journal of Theoretical and Applied Statistics, 5(1). https://doi.org/10.11648/j.ajtas.20160501.11

Fang, Y., Bao, X., Sun, B., & Lau, R. Y. K. (2024). CEO social media celebrity status and credit rating assessment [Article]. Internet Research. https://doi.org/10.1108/INTR-02-2023-0084

Figge, F., & Hahn, T. (2005). The Cost of Sustainability Capital and the Creation of Sustainable Value by Companies. Journal of Industrial Ecology, 9.

Flammer, C., Toffel, M. W., & Viswanathan, K. (2021). Shareholder activism and firms' voluntary disclosure of climate change risks. Strategic Management Journal, 42(10), 1850-1879. https://doi.org/10.1002/smj.3313

Fralich, R., & Papadopoulos, A. (2020). The impact of target CEO celebrity on M&A premiums [Article]. Canadian Journal of Administrative Sciences, 37(3), 268-282. https://doi.org/10.1002/cjas.1549

Franco-García, M.-L., Carpio-Aguilar, J. C., & Bressers, H. (2019). Towards Zero Waste, Circular Economy Boost: Waste to Resources. In Infinity in Early Modern Philosophy (pp. 1-8). https://doi.org/10.1007/978-3-319-92931-6_1

Freeman, R. E., & Dmytriyev, S. (2017). Corporate Social Responsibility and Stakeholder Theory: Learning From Each Other. Symphonya. Emerging Issues in Management(1), 7-15. https://doi.org/10.4468/2017.1.02freeman.dmytriyev

Freeman, R. E., Dmytriyev, S. D., & Phillips, R. A. (2021). Stakeholder Theory and the Resource-Based View of the Firm. Journal of Management, 47(7), 1757-1770. https://doi.org/10.1177/0149206321993576

Grover, P., & Kar, A. K. (2020). User engagement for mobile payment service providers – introducing the social media engagement model. Journal of Retailing and Consumer Services, 53. https://doi.org/10.1016/j.jretconser.2018.12.002

Hermeindito. (2022). Relationships Between Corporate Social Responsibility, Firm Value, and Institutional Ownership: Evidence from Indonesia. Journal of Asian Finance, Economics and Business Vol 8 No 2 (2021) 0135–0142, 9. https://doi.org/10.13106/jafeb.2022.vol9.no5.0365

Kansikas, J. P. (2021). Novel and progressive–or traditional and reproductive?: critical discourse analysis on celebrity executives’ ideological talk.

Khandker, S. R. (2023). Grameen Bank: Impact, Costs, and Program Sustainability. Asian Development Review, 14(01), 97-130. https://doi.org/10.1142/s0116110596000048

Kim, B., & Lee, S. (2022). The impact of celebrity CEOs on restaurant firm performance: The moderating role of environmental dynamism. Journal of Business Research, 139, 869-880. https://doi.org/https://doi.org/10.1016/j.jbusres.2021.10.031

Kontesa, M., Lako, A., & Wendy, W. (2020). Board capital and earnings quality with different controlling shareholders. Accounting Research Journal, 33(4/5), 593-613. https://doi.org/10.1108/arj-01-2020-0017

Lee, G., Cho, S. Y., Arthurs, J., & Lee, E. K. (2020). Celebrity Ceo, Identity Threat, and Impression Management: Impact of Celebrity Status on Corporate Social Responsibility. Journal of Business Research, 111, 69-84. https://doi.org/10.1016/j.jbusres.2020.01.015

Leitch, D., & Sherif, M. (2017). Twitter mood, CEO succession announcements and stock returns. Journal of Computational Science, 21, 1-10. https://doi.org/10.1016/j.jocs.2017.04.002

Lovelace, J. B., Bundy, J., Hambrick, D. C., & Pollock, T. G. (2017). The Shackles of CEO Celebrity: Sociocognitive and Behavioral Role Constraints on “Star” Leaders. Academy of Management Review.

Luo, X., Zhang, J., & Duan, W. (2013). Social Media and Firm Equity Value. Information Systems Research, 24(1), 146-163. https://doi.org/10.1287/isre.1120.0462

Malmendier, U., & Tate, G. (2009). Superstar CEOs. The Quarterly Journal of Economics.

Na, H. J., Kim, S. R., & Jo, H. J. (2022). Integrating Text-Mining and Sustainability Balanced Scorecard Methods to Examine the Relationship between CEO Messages of Homepages and Firm Value: Emphasis on Fashion Companies in South Korea. Sustainability, 14(22). https://doi.org/10.3390/su142215285

Nguyen, V. H., Gomez, C., Mishra, S., & Parhizgari, A. M. (2021). CEO vs. COO: shareholder perceptions of M&A announcements based on insider trades [Article]. Managerial Finance, 47(9), 1253-1269. https://doi.org/10.1108/MF-07-2020-0369

Nikolaou, I. E., Tsalis, T. A., & Evangelinos, K. I. (2019). A framework to measure corporate sustainability performance: A strong sustainability-based view of firm. Sustainable Production and Consumption, 18, 1-18. https://doi.org/10.1016/j.spc.2018.10.004

Rétvári, M. R., Kovács, L., & Kárpáti, A. (2022). Roma Cultural Influencers: Social Media for Identity Formation. In European Conference on Social Media, 9.

Rojo-Suárez, J., & Alonso-Conde, A. B. (2023). Short-run and long-run effects of ESG policies on value creation and the cost of equity of firms. Economic Analysis and Policy, 77, 599-616. https://doi.org/10.1016/j.eap.2022.12.017

Rounok, N., Qian, A., & Alam, M. A. (2023). The Effects of ESG issues on investment decision through corporate reputation: Individual investors’ perspective. International Journal of Research in Business and Social Science (2147- 4478), 12(2), 73-88. https://doi.org/10.20525/ijrbs.v12i2.2354

Ryu, E. A., & Han, E. (2021). Social Media Influencer’s Reputation: Developing and Validating a Multidimensional Scale. Sustainability, 13(2). https://doi.org/10.3390/su13020631

Sahoo, S. K., Das, A. K., Samanta, S., & Goswami, S. S. (2023). Assessing the Role of Sustainable Development in Mitigating the Issue of Global Warming. Journal of process management and new technologies, 11.

Shao, D., Lv, K., Zhao, S., & Wang, S. (2022). Celebrity CEOs and Firm Innovation Investment: Evidence from Chinese-Listed Companies. Front Psychol, 13, 978946. https://doi.org/10.3389/fpsyg.2022.978946

Shi, W., Zhang, Y., & Hoskisson, R. E. (2017). Ripple Effects of CEO Awards: Investigating the Acquisition Activities of Superstar CEOs' Competitors. Strategic Management Journal, 38(10), 2080-2102. https://doi.org/10.1002/smj.2638

Stets, J. E., & Serpe, R. T. (2013). Identity Theory. In Handbook of social psychology (pp. 31-60). https://doi.org/10.1007/978-94-007-6772-0_2

Suttipun, M., Lakkanawanit, P., Swatdikun, T., & Dungtripop, W. (2021). The Impact of Corporate Social Responsibility on the Financial Performance of Listed Companies in Thailand. Sustainability, 13(16). https://doi.org/10.3390/su13168920

Wade, J. B., Porac, J. F., Pollock, T. G., & Graffin, S. D. (2006). The Burden of Celebrity: The Impact of Ceo Certification Contests on Ceo Pay and Performance. The Academy of Management Journal, 49. https://www.jstor.org/stable/20159790

Wade, J. B., Porac, J. F., Pollock, T. G., & Graffin, S. D. (2006`). The Burden of Celebrity: The Impact of Ceo Certification Contests on Ceo Pay and Performance. The Academy of Management Journal, 49.

Wang, Q., Lau, R. Y. K., & Xie, H. (2021). The Impact of Social Executives on Firms’ Mergers and Acquisitions Strategies: a Difference-in-Differences Analysis. Journal of Business Research, 123, 343-354. https://doi.org/10.1016/j.jbusres.2020.10.004

Wu, S., Li, X., Du, X., & Li, Z. (2022). The Impact of ESG Performance on Firm Value: The Moderating Role of Ownership Structure. Sustainability, 14(21). https://doi.org/10.3390/su142114507

Yang, S., Zhao, Y., & Wu, C. (2023). Does CEO celebrity affect IPO underpricing? Evidence from the strategic emerging industries in China. International Journal of Emerging Markets, ahead-of-print(ahead-of-print). https://doi.org/10.1108/IJOEM-12-2022-1815

Yordudom, T., & Suttipun, M. (2020). The Influence of ESG Disclosures on Firm Value in Thailand. GATR Journal of Finance and Banking Review, 5(3), 108-114. https://doi.org/10.35609/jfbr.2020.5.3(5)

Yorozu, C. (2017). New institutional entrepreneurship and a celebrity CEO: the role of institutional actors in Japan. Journal of Organisational Transformation & Social …. https://doi.org/10.1080/14779633.2017.1341763

Zhou, L., Long, W., Qu, X., & Yao, D. (2023). Celebrity Ceos and Corporate Investment: A Psychological Contract Perspective. International Review of Financial Analysis, 87. https://doi.org/10.1016/j.irfa.2023.102636

When Celebrity CEOs Undermine Sustainability Value: Evidence from Indonesian Firms

Keywords

How to Cite

Download Citation

Abstract

References