The moderating effect of power distance on the relationship between CEO career horizon and ESG performance

This study aims to understand the moderating role of power distance culture on the relationship between CEOs’ career time horizon and ESG performance. In doing so, this study contributes to the debate on the effects of CEOs’ career horizon. The relationship between CEO duality and ESG performance was also analysed. The study resorts to a sample of 854 companies from 12 countries and uses hierarchical linear modelling. The Upper Echelons Theory and the Stakeholder Theory theoretically support the hypotheses. The results show that power distance culture positively moderates the relationships between CEO career horizon and ESG performance, making the effect of CEO tenure on this outcome less negative and the effect of CEO age more positive. The different impact of the two components of the CEO career horizon suggest that its measurement should be revised. The findings have practical implications because they provide new insights that can inform CEO recruitment processes and guide the definition of corporate governance mechanisms.