ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market

Gonul Colak; Kent Hickman; Timo Korkeamäki; Niclas Meyer

doi:10.1111/fmii.12168

ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market

Gonul Colak^*
, Kent Hickman
, Timo Korkeamäki
, Niclas Meyer

^*Corresponding author for this work

Research output: Contribution to journal › Article › Scientific › peer-review

6 Citations (Scopus)

Abstract

Using an international sample of firms, we investigate the career prospects of directors of firms experiencing negative ESG issues. By tracking the same director at the same firm over time, we document a significant drop in seats held at other public firms’ boards following intense negative media coverage of an ESG problem occurring at a given director's focal firm. Losses of seats at other firms are concentrated among executive directors, among directors of firms located in countries with high environmental and social norms, and among directors of firms located in countries with bank-based systems. Nonexecutive directors and directors of firms located in less stakeholder-oriented countries are not penalized for ESG issues by the director labor market.

Original language	English
Peer-reviewed scientific journal	Financial Markets, Institutions and Instruments
Volume	31
Issue number	4
Pages (from-to)	147-203
Number of pages	57
ISSN	0963-8008
DOIs	https://doi.org/10.1111/fmii.12168
Publication status	Published - 24.06.2022
MoE publication type	A1 Journal article - refereed

Keywords

512 Business and Management
Director Career Prospects
Director Labor Market
Environmental, Social, and Governance (ESG)
Legal Origin
Shareholder Value
Stakeholder Orientation

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10.1111/fmii.12168Licence: CC BY

Financial Market - 2022 - Colak - ESG Issues and Career Prospects of Directors Evidence from the International Director(1)Final published version, 832 KBLicence: CC BY

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title = "ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market",

abstract = "Using an international sample of firms, we investigate the career prospects of directors of firms experiencing negative ESG issues. By tracking the same director at the same firm over time, we document a significant drop in seats held at other public firms{\textquoteright} boards following intense negative media coverage of an ESG problem occurring at a given director's focal firm. Losses of seats at other firms are concentrated among executive directors, among directors of firms located in countries with high environmental and social norms, and among directors of firms located in countries with bank-based systems. Nonexecutive directors and directors of firms located in less stakeholder-oriented countries are not penalized for ESG issues by the director labor market.",

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author = "Gonul Colak and Kent Hickman and Timo Korkeam{\"a}ki and Niclas Meyer",

note = "Funding Information: This paper previously circulated under the title “Corporate Social Responsibility and Director Reputation”. The authors thank Niklas Ahlgren, R{\"u}diger Fahlenbrach, Eliezer Fich, Mikko Lepp{\"a}m{\"a}ki, Eva Liljeblom, Thomas Noe, Charlotte {\O}stergaard, Luc Renneboog, Konrad Raff, Lisa Schopohl, Sami Torstila, Sami V{\"a}h{\"a}maa, Kam‐Ming Wan, Yaoyi Xi, and B{\"u}nyamin {\"O}nal as well as seminar participants at the 2018 FMA Annual Meeting in San Diego, the 2018 Nordic Finance Network (NFN) workshop in Lund, the 2017 FMA Annual Meeting in Boston, the 2017 GSF Seminar in Helsinki, and the 2018 and 2017 November Brown Bag seminars at Hanken for valuable comments that helped improve the paper. Niclas Meyer also thanks OP Group Research Foundation (grant nr. 201600098 and 20170020), the Foundation for Economic Education (170257, 190260, and 190261), the Hanken Support Foundation (197‐4992), Society of Swedish Literature in Finland (2078), and the Foundation of Jakob Palmstierna (SIFR, Institute for Financial Research, Stockholm) (1) for financial support for his doctoral dissertation (this paper is part of the dissertation). All remaining errors are of course our own. * Publisher Copyright: {\textcopyright} 2022 New York University Salomon Center.",

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ESG Issues and Career Prospects of Directors: Evidence from the International Director Labor Market

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