The bright side of executive financial background: a perspective based on corporate ESG performance

Abstract Against the backdrop of the transition to sustainable economic development, corporate environmental, social, and governance (ESG) performance has gradually become a focal point for investors and governments. This study focuses on the perspective of executives’ financial backgrounds and, based on the upper echelon theory, empirically analyzes the impact and mechanisms of executives’ financial background on corporate ESG performance using data from A-share listed companies in China from 2008 to 2022. From the perspectives of resource acquisition and risk-taking, the results show that executives’ financial background can effectively enhance corporate ESG performance, and this holds true even after distinguishing the three dimensions of environment, responsibility, and governance. Mechanism analysis indicates that executives’ financial background can effectively alleviate corporate financing constraints and increase risk-taking levels, thereby enhancing corporate ESG performance. Further analysis reveals that both male and female CEOs have a positive effect, with female CEOs having a stronger impact. Moreover, local CEOs exhibit a more significant positive effect compared to non-local CEOs. In addition, digital finance plays a positive moderating role between executives’ financial background and ESG performance, and this positive moderating effect holds across all three sub-dimensions of ESG. This paper enriches relevant research on upper echelon theory and financing theory, offering both theoretical and practical insights into corporate executives’ strategic choices and ESG performance. It also provides valuable implications for governments in adjusting digital finance development strategies and corporate resource governance.