Responsibility or entitlement? The double-edged effects of CEO awards on firm environmental behaviors

Purpose By integrating identity control theory and psychological entitlement literature, this study aims to explore the double-edged effect of chief executive officer (CEO) awards on firm environmental behaviors. It further examines how CEO incentives and board monitoring shape these effects. Design/methodology/approach Using a difference-in-differences research design, the authors treat the receipt of a prestigious CEO award as an exogenous shock and analyze panel data of Chinese listed firms from 2009 to 2022. Findings The findings indicate that award-winning CEOs are more likely to engage in green innovation and commit environmental misconduct in the post-award period than in the pre-award period. Award-winning CEOs promote green innovation to reinforce their public identity, while they may also increase engagement in environmental misconduct for enhanced psychological entitlement. Furthermore, the extent to which a firm engages in such behaviors varies with the level of incentives and monitoring. Specifically, when CEOs are overpaid or the board holds more meetings, the likelihood of environmental misconduct is reduced. Moreover, under conditions of overpayment, award-winning CEOs show increased engagement in green innovation. Originality/value This study advances CEO awards research by developing an integrated theoretical framework that explains the seemingly paradoxical coexistence of green innovation and environmental misconduct following CEO recognition. It also takes a deeper dive into how the governance context of the firm shapes the behavioral expression of award-winning CEOs.