The Impact of CEO and Firm Attributes on ESG Performance: Evidence from an Emerging Market

Abstract

The research aims to unveil the impact of CEO traits and firm attributes on corporate environmental, social, and governance (ESG) performance within the Egyptian context as an emerging market. Using the quantitative research approach, we analyzed a panel of data from 43 listed firms in the S&P/EGX ESG index from 2014 to 2022 through three statistical models to examine how CEO power, confidence, and tenure influence corporate sustainability practices. Our findings reveal that CEO power and confidence influence ESG performance and shape the firm’s strategy. However, there is no significant influence related to CEO tenure. Moreover, we found mixed evidence regarding the impact of firm financial attributes, such as the positive impact of firm size and operating cash flow on ESG performance and the negative impact of firm listing tenure. Our findings contribute to the literature by adding new empirical evidence in this arguable area from an emerging market and provide new insights into the significant influence of the firm’s first man (CEO) in shaping its sustainability practices, especially ESG. In addition, it gives professional authorities and policymakers insights into the nexus between the CEO and the firm’s ESG strategies, disclosure, and performance. Moreover, it can motivate future research to re-examine the role of CEO traits in shaping ESG performance in other countries to create a comprehensive understanding of this knowledge field.

1. Introduction

The environmental, social, and governance (ESG) concept in today’s dynamic business landscape is significantly important for firms in stock markets aiming to show their engagement in sustainable development and responsible practices. To date, the term ESG, which is an acronym that merges three dimensions, does not have a clear academic definition. Whereas ESG as a concept is considered the wider generation of corporate social responsibility (Colak et al., 2024; Nasta et al., 2024; Gupta et al., 2025) and is regarded as the framework for firms’ sustainable development (Wan et al., 2023). In the 1990s, as stakeholders became significantly concerned about environmental issues, firms started to consider environmental elements in their investments. Going further, the United Nations Global Compact in 2004 published “Who Cares Wins”, the first integration of the dimensions of environmental (E), social (S), and governance (G), and put forward the ESG concept (UN Global Compact, 2004). Then, the United Nations published “The Principles for Responsible Investment—PRI” in 2006, which mainly encouraged the adoption of ESG.

Since then, many scholars have tried to develop a framework for the definition of ESG, information disclosure, and performance evaluation (Galbreath, 2013; van Duuren et al., 2016; Verheyden et al., 2016; Parfitt, 2020). More recently, Gao et al. (2021) and Singh et al. (2023) showed that the ESG concept is a part of socially responsible investment (SRI), and it was developed as the next generation of corporate social responsibility (CSR) but in a wider range. Notably, ESG represents a new approach to sustainable development and is considered a new lens to explore the challenges, opportunities, and risks in firms’ paths (Wan et al., 2023).

In a broad sense, ESG is a “philosophy” that takes environmental, social, and governance issues into consideration in the process of decision making. So, when a firm has disclosed ESG information, rating professional bodies can evaluate its ESG more precisely and stakeholders can confidently depend on ESG as an evaluation standard (Avramov et al., 2022). However, ESG ratings have also been under social doubt, even in developed countries where ESG practices are advanced (Wan et al., 2023). Due to the global interest in the sustainable development process and the ESG philosophy, academic research regarding ESG’s dimensions has gained much attention.

In line with this global interest, the number of studies related to ESG has increased, especially those that associate ESG with firm business environments (internal and external). From the internal side, the CEO is considered the main player in setting firm strategies, and his traits (e.g., power, confidence, and tenure) clearly have a role in shaping the firm’s ESG practices (Colak et al., 2024). So, this research is driven by many motivations. First, the growing importance of ESG as a new global phenomenon in annual financial reporting. Second, the Egyptian stock market is currently moving with large steps toward achieving sustainability in many directions, such as establishing the Egyptian ESG index (S&P/EGX/ESG-Index) in 2010. Third, the major reforms in the legislative environment regarding corporate governance, where the Egyptian corporate governance (ECG) code was formally issued by the Ministry of Investment in 2005 to be adopted by listed firms in the stock market. After eleven years, detailed corporate governance standards were issued in 2016 by the Egyptian Financial Supervisory Authority.

Motivated by the above, this research aims to determine firm financial attributes (e.g., size, listing tenure, tangibility, profitability, and cash flow) that may drive ESG practices in Egypt and set a framework for the relationship between CEOs and ESG with empirical evidence from Egypt as an emerging market. So, this research tries to answer the following questions:

• Do firm financial attributes impact ESG performance in the Egyptian context?
• Do CEO traits impact ESG performance in the Egyptian context?

Research Structure

The rest of this paper is structured as follows: Section 2 includes the background, literature, and hypotheses. Section 3 describes the development of research models. Section 4 gives the empirical results. Then, the discussion and the answer to research questions are given in Section 5, followed by Section 6, the conclusion.

2. Literature Review and Hypotheses Development

Regarding the core meaning of ESG, all definitions utilized in academic research—globally—have the same background, all focusing on the firm’s performance regarding quality and quantity of disclosure in formal reports from the perspectives of the environment, society, and government. Thus, the main connotations are the same. However, the classification and indicators used within each perspective differ. At present, many studies and professional institutions have put forward their representative point of view to define ESG (Galbreath, 2013; Verheyden et al., 2016; Xu et al., 2021; Hao et al., 2022; X. Zhang & Jung, 2023). First, environmental, social, and governance considerations are taken as indicators to direct investment-related decisions. Thus, ESG is integrated into the decision-making and investment analysis framework. Second, the firms’ responses to environment-, society-, and governance-related issues serve as a basis for evaluating their performance. Third, a strategy that integrates environmental, social, and governance risks into any investment decision is made. Fourth, firms follow the sustainable development concept to increase value creation in terms of ESG.

Concerning disclosure, ESG information can improve a firm’s information transparency and risk management (Wang et al., 2023). Moreover, it strengthens the process of sustainable development (Zhou et al., 2022). In addition, the current guidelines for ESG disclosure are published by international organizations; they are not legally binding such as (A) the United-Nations-issued Principles of Responsible Investment (PRI), (B) corporate governance standards, (C) Guidelines on Social Responsibility ISO 26000 (ISO, 2010), and (D) ESG integration into some accounting standards, but ESG disclosures still need more formalization (Hao et al., 2022).

The accounting literature has investigated ESG based on many theories such as agency, legitimacy, institutional, stewardship, signaling, and stakeholder (Saini et al., 2023; Wan et al., 2023; Seow, 2024). In brief, any firm needs to care about the values and special norms of the society where the firm’s activities are operating to produce legitimacy from the surrounding society and provide benefits to all stakeholder categories (Triyani et al., 2020). This is a major issue because social recognition is considered a factor that can shape the landscape of a firm’s sustainability (Farrakhova, 2022). Moreover, disclosures can be a tool to illustrate changes in ESG practices or to enhance a low reputation regarding financial performance. In addition, a firm’s survival relies not only on improving the financial ratios but also on attending to all stakeholders’ interests., including the environment around it. So, the firm must have a significant positive effect on all stakeholders, because stakeholders’ confidence in the firm’s investment strategy will increase the equity capital. This consists of the stakeholder and legitimacy theories’ assumptions because firms consider good governance to gain societal legitimacy.

Historically, Egyptian firms mainly focused on economic profits. However, increasing global interest in sustainable growth and responsible business practices has seen Egypt’s listed firms gradually adopt ESG practices. As a piece of evidence of this shift, ESG consulting firms in Egypt have proliferated, and the demand for specialized ESG accounting and auditing offices has significantly increased, reflecting the firm’s commitment to these principles.

In terms of the relevant laws and regulations, first, law No. 4/1994 (Environment) and its amendments provide the main guideline in this area. It emphasizes the importance of preserving natural resources, combating pollution, and encouraging the use of sustainable technologies. Second, law No. 12/2003 (Labor) provides workers’ main rights. In addition, the Constitution of 2014 established a high coverage of social rights, including education, health, and suitable housing. Third, Law No. 159/1981 (Firms) and its subsequent modifications provide the guidelines for corporate governance practices. Moreover, the Egyptian Financial Regulatory Authority (FRA) issued the Corporate Governance Principles for listed firms in 2016, which are considered the foundational framework for board structures, transparency, and stakeholders’ rights (https://eg.andersen.com/esg-in-egypt-sustainable-investment/ accessed on 7 May 2025).

On the way to sustainability in 2010, the Egyptian Exchange (EGX) and S&P Dow Jones Indices collaborated to establish the Egyptian index for ESG, which was issued under the name of the S&P/EGX ESG index. The ESG index includes the top 100 firms listed on the EGX according to the EGX100 index, as ranked by total trade volume and value during the financial year. After that, firms are ranked in descending order by their ESG score annually (after the last trading day of July), with the top 30 firms selected and forming the index. In this sense, the Egyptian index calculation follows the divisor methodology, which is mainly used in most S&P Dow Jones Indices’ equity indices (Aboud & Diab, 2018). Moreover, in 2021, the Financial Supervisory Authority established new instructions for the management of environmental and social risk (Diab & Eissa, 2024).

Academic literature around the CEO-ESG nexus in the Egyptian context is rare. However, there are some studies that illustrated the ESG-BOD nexus, such as Al Farooque et al. (2022) which examined the impact of board nationality and gender on firms’ ESG disclosure. In addition, Gamal et al. (2022) explored the impact of firm life cycle on CSR investment decisions. Furthermore, El-Deeb et al. (2023) unveiled the impact of ESG disclosure on firm value, and audit quality and BOD were moderating variables, Abdelmoneim and El-Deeb (2024) analyzed how ESG disclosure affects integrated reporting, considering the board of directors’ traits as a moderating factor.

2.1. ESG and CEO Traits in the Literature

Until recently, examining the impact of the CEO on ESG was limited to corporate governance regulation. Recently, a new stream of literature went beyond corporate governance and moved on to CEO traits such as power, confidence, and tenure. In the following, the previous debate in this area is summarized.

2.1.1. CEO Power and ESG

Finkelstein (1992) defined power as the “capacity of individual actors to exert their will”. Thus, CEOs are the main designers of a firm’s financial reporting strategies, and their position is the source of power (Triyani et al., 2020). The accounting literature has shown mixed perspectives around CEO power and ESG levels.

Li et al. (2018) indicated that ESG score is more value-enhancing with powerful CEOs and emphasized that a CEO who has more power of control over the firm’s activities will tend to perform better on ESG disclosure. In the same line, Zou et al. (2021) showed that there are two types of CEO power, formal and informal, and found that CEO duality and CEO ownership (the formal type of power) are positively related to ESG. Moreover, Zhao et al. (2023) argued that ESG performance positively decreases risks, and this association is lower with institutional ownership and stronger with a powerful CEO. In another study, Menla Ali et al. (2024) argued that a firm with a powerful CEO has more effective ESG performance and stakeholders’ trust. On the contrary, C. H. Tang et al. (2024) showed that the CEO traits in any firm have an important role in shaping the ESG dynamics. In this sense, the decision-making power concentration in one person (CEO) will overshadow board insights and result in an impact on ESG disclosure practices. Thus, with evidence, CEO power is usually associated with lower ESG levels.

The previous literature on CEO power and ESG performance provides a complex picture. Some scholars suggest a positive nexus, arguing that powerful CEOs are more likely to prioritize ESG initiatives and drive better ESG performance. However, other scholars indicate that concentrated power can lead to lower ESG performance. This perspective highlights the potential for powerful CEOs to prefer short-term profits and personal interests over stakeholder concerns about sustainability. Based on the above mixed arguments, the following hypothesis can be developed to test the impact of CEO power on ESG:

H1: 

CEO power positively impacts ESG performance in the Egyptian context.

2.1.2. CEO Confidence and ESG

McCarthy et al. (2017) clarified the association between CEO confidence and corporate social responsibility and found that CEO confidence negatively impacts the CSR level. Moreover, this impact is more significant on the institutional side of CSR than on the technical side of CSR, like corporate governance. Consistent with this, Zribi and Boufateh (2020) aimed to elucidate the effect of CEO confidence on each ESG aspect separately in France from 2006 to 2016 and found a significantly negative effect of underconfident CEOs on the environmental aspect but a non-significant statistical effect of overconfident CEOs. However, a negative effect of overconfidence on the social aspect was found. For the governance aspect, a positive effect of CEO overconfidence and a non-significant statistical effect of CEO underconfidence were detected. In the Russian business environment, Lazareva (2022) argued that the empirical evidence in the literature on the impact of a CEO’s behavioral biases on sustainability strategies is still unclear in both developed and developing countries. Moreover, a significant impact of narcissism and optimism on ESG performance was confirmed. Also, it was noted that confidence was not statistically significant.

The previous literature on CEO confidence and ESG performance reveals an unclear nexus, where many scholars have found that CEO confidence can negatively impact ESG. However, the impact varies across different dimensions of ESG. For instance, underconfident CEOs may be more cautious about environmental risks, while overconfidence can negatively affect social performance. In addition, CEO overconfidence may have a positive impact on governance performance. Furthermore, research highlights the role of other behavioral biases in shaping ESG, while the direct impact of CEO confidence itself might be less pronounced. Based on the above mixed arguments, the following hypothesis can be developed to test the impact of CEO confidence on ESG:

H2: 

CEO confidence positively impacts ESG performance in the Egyptian context.

2.1.3. CEO Tenure and ESG

Being the most important member of a firm’s board, the CEO has considerable influence over strategic choices, and ESG is regarded as one of them (Velte, 2022). An experienced CEO can direct the decision making, especially regarding stakeholders’ interests. But previous studies have not yet shown undoubtedly whether the CEO’s tenure may positively enhance ESG reporting.

According to Hambrick and Fukutomi (1991), the different phases within a CEO’s tenure in a position result in many operational patterns. Therefore, tenure may have both negative and positive effects on ESG depending on the CEO’s period cycle seasons. Following this point, many studies argued that, during the earlier seasons, CEOs engage in new initiatives and expand their knowledge and skills as tenure increased, thus improving ESG. However, in the later seasons, CEOs tend to be more confident in their point of view and adapt less to the external environment (Garcia-Blandon et al., 2019). Therefore, there are arguments supporting both the negative and positive impacts of tenure and ESG. In this regard, Triyani et al. (2020) found that CEO tenure has a positive impact on ESG. The longer the CEO tenure, the better the disclosure of ESG. In the same line, Kim and Kim (2023) showed that CEOs in their first years have greater career concerns and are likelier to invest in ESG practices. In contrast, Zhuang et al. (2018) showed that long CEO tenure will result in them being unresponsive to updated developments and found a negative impact of CEO tenure on ESG. Moreover, Garcia-Blandon et al. (2019) found that CEOs with longer tenures have better financial performance but weaker performance regarding ESG. In this sense, Zou et al. (2021) showed that CEO tenure (informal power) has a negative relationship with ESG.

The previous literature on CEO tenure and ESG performance presents a complex picture. While long tenure can be related to increased experience and a deeper understanding of stakeholder concerns, potentially leading to improved ESG performance, it can also lead to complacency, resistance to change, and a focus on short-term gains over long-term sustainability. Based on the above mixed arguments, the following hypothesis can be developed to test the impact of CEO tenure on ESG:

H3: 

CEO tenure positively impacts ESG performance in the Egyptian context.

2.2. ESG and Firm Financial Attributes in the Literature

Based on the rapid growth in ESG practices and research, many studies have tried to determine the ESG concept and related firm financial attributes. So, to provide deep insights into this academic area, the research is summarized as follows:

Based on a worldwide sample from 22 countries and 727 firms from 2006 to 2017, Crespi and Migliavacca (2020) tried to understand the dynamics of ESG by investigating its determinants and provided empirical evidence that ESG levels are increasing in a positive linear trend from year to year, with this tendency enhanced by their profitability and size, and found that there is a positive impact of total assets and profitability on ESG levels, but the relationship with equity capital is significantly negative. Moreover, in the Indian context, Sharma et al. (2020) found that profitability (ROA) and firm size are positively related to the level of ESG disclosures. However, the level of disclosure is significantly affected by the type of industry. These arguments were based on Indian firms listed on the Bombay Stock Market from 2013 to 2016. In the United Arab Emirates context, Modugu (2020) examined the nexus between firm financial attributes and ESG disclosure and observed that firms with large sizes and high liquidity tend to disclose more information about ESG. However, firms in the manufacturing sector are less interested in ESG disclosure than service firms. Providing another piece of evidence from Asia but using data from 20 different countries collectively from 2005 to 2017, Abdul Rahman and Alsayegh (2021) found that firms disclose more information about ESG to legitimize the firm’s existence, and this is consistent with the legitimacy theory. Moreover, it was revealed that highly socially visible firms (i.e., in terms of economic performance, firm profitability, and size) are usually under various pressures from stakeholders. Hence, these firms disclose more ESG information. Providing another piece of evidence from India, Joshi and Joshi (2024) examined the financial drivers of ESG based on 94 listed firms from 2015 and 2020 and found that firm size, operating cash flow, asset intangibility, cash holdings, and analyst coverage influence firms’ ESG levels positively, whereas leveraging impacts them negatively and dividends do not have an impact on ESG disclosure. In China and based on a sample of listed firms on both the Shanghai and the Shenzhen Stock markets from 2009 to 2017, T. Tang and Yang (2024) found that some firm attributes, including having higher profitability and a larger market and firm size, are more likely to be related to a high effect of social trust especially on ESG and argued that factors such as larger market capitalization, lower firm age, higher profitability, and higher managerial ownership contribute to better ESG disclosure.

So, the previous literature noted the role of firm financial attributes in driving ESG performance across diverse countries such as India, UAE, and China. Scholars have shown that larger, more profitable firms tend to disclose more information about their ESG impacts. This phenomenon can be attributed to various elements, including legitimacy and the pressure of investors. However, the nexus between firm financial attributes and ESG is not uniform across industries. For instance, manufacturing firms often have lower levels of ESG performance compared to service firms. Furthermore, the impact of specific factors such as firm size, listing tenure, tangibility, profitability, and operating cash flow on ESG varies across different regions and countries, underscoring the importance of considering contextual factors when analyzing ESG performance. Based on these international mixed arguments, the following hypothesis can be stated to test the impact of firm financial attributes on ESG performance:

H4: 

Firm financial attributes (size, listing tenure, tangibility, profitability, and operating cash flow) positively impact ESG performance in the Egyptian context.

3. Method

3.1. The Study Sample

The study’s population comprises firms listed on the Egyptian exchange market from 2014 to 2022. However, some firms have been excluded, resulting in a final sample size of 43 listed firms (panel data). The following

Table 1. The Distribution of the Sample.

GICS Sector Name	Freq.	Freq.	Percent
Communication Services	2	18	5.45
Consumer Discretionary	9	68	20.61
Consumer Staples	8	60	18.18
Health Care	1	7	2.12
Industrial	10	76	23.03
Materials	11	86	26.06
Real Estate	2	15	4.55
Total	43	330	100.00

illustrates the study observations in seven sectors during the period under study in accordance with the Global Industry Classification Standard.

3.2. Variable Measurement

3.2.1. ESG Disclosure Score (Dependent Variable)

Following many studies conducted in the Egyptian business environment (Aboud & Diab, 2018; Dawood et al., 2021; Gamal et al., 2022; Diab & Eissa, 2024), we used the data about EGS from the website of the Egyptian Exchange (EGX). More deeply, based on the Egyptian index (S&P/EGX ESG), the index consists of the top 100 firms listed on the EGX, as ranked by total value traded during the 12 months ending on the last day of trading in May.

3.2.2. CEO Attributes (Independent Variable)

CEO Power

As Finkelstein (1992) argues, there is no individual measure able to capture all dimensions of CEO power successfully and appropriate to all business environments. In this regard, Pucheta-Martínez and Gallego-Álvarez (2024) showed that the CEO power is a complex concept, and its measurement can be performed in several ways. Moreover, Zhao et al. (2023) emphasized that the CEO is the key person responsible for the firm. So, first, combining the roles of chairman and CEO can make the CEO more powerful. Second, the CEO’s power is also significantly impacted by equity dispersion. Along the same line, Menla Ali et al. (2024) measured the CEO power based on CEO duality. Drawing from the aforementioned, we employed a composite measurement approach that integrates CEO duality and equity dispersion.

CEO Confidence

Many empirical studies have used different methods to capture the CEO’s confidence (Zribi & Boufateh, 2020). In this regard, Malmendier and Tate (2008) developed a measurement based on investment options. Moreover, Ben-David et al. (2013) showed that the decisions related to investment are connected to the CEO’s confidence and provide two methods to capture overinvestment. The first method is capital expenditures (CapExp.), and the second method is the overinvestment in assets. In this research, we followed Khajavi and Dehghani (2016) by applying the asset overinvestment method, which assumes that the overinvestment is computed from the regression model of asset growth (AG) and sales growth (SG) based on industry-year, as follows:

$${\mathrm{A}\mathrm{G}}_{\mathrm{i}\mathrm{t}}=\mathsf{\beta }0+{\mathsf{\beta }1\mathrm{S}\mathrm{G}}_{\mathrm{i}\mathrm{t}}+{\mathrm{E}}_{\mathrm{i}\mathrm{t}}$$

(1)

In which AG_it, SG_it, and E_it represent asset growth, sales growth, and the residuals at the end of year (t) for a firm (i). A positive value of these residuals means assets are overinvested. After that, from the overinvestment, the indicator is the negative and positive movements that characterize the equation’s residuals. Our measure in this paper assumes that the CEO overconfidence variable has the same theme of positive overinvestment fluctuations.

CEO Tenure

Following many studies in the literature, Garcia-Blandon et al. (2019) measured the CEO’s tenure by categorizing the working period into 3 levels (less than 10 years, between 10 and 20 years, and more than 20 years) and arrange tenure as 1, 2, and 3. In another study, Triyani et al. (2020) measured the CEO’s tenure by the number of months of work experience as a CEO. Moreover, Almulhim and Aljughaiman (2023) measured the CEO’s tenure by the number of years since the appointment. Drawing from the aforementioned, we used the number of years to measure CEO tenure. So, the measurement method for the CEO power, confidence, and tenure that was used in this research is shown in

Table 2. The measurement of CEO traits.

Variable	Measurement	Ref.
CEO Power	Composite method, if the sum of CEO duality and equity dispersion is equal or greater than 1, it is recorded as 1, otherwise it is recorded as 0	(Zhao et al., 2023)
CEO Confidence	The positive movements of the firm investment	(Zribi & Boufateh, 2020)
CEO Tenure	Number of years as a CEO in the firm	(Almulhim & Aljughaiman, 2023)

as follows:

3.2.3. Firm Financial Attributes (Control Variables)

The accounting literature provided several firm financial attributes related to voluntary disclosure. More deeply, ESG disclosure in many studies (Galbreath, 2013; Ali et al., 2022; Homroy et al., 2023; C. Zhang & Wu, 2023; X. Zhang & Jung, 2023; Diab & Eissa, 2024) was examined in accordance with the key attributes such as firm size, firm listing tenure, tangibility, profitability, and operating cash flow. So, firm financial attributes were in our research as the drivers of ESG disclosure. In line with the extant literature, we summarized the measurement methods to capture firm financial attributes in the Egyptian business environment in

Table 3. Measurement method of firm financial attributes.

Variable		Measurement Menthod	Ref.
Firm size	FS	The natural logarithm of total assets	(Triyani et al., 2020)
Firm listing tenure	FLT	Number of financial years since the firm was listed	(Diab & Eissa, 2024)
Asset tangibility	TANG	[(0.715 × accounts receivable) + (0.547 × inventory) + (0.535 × equity) + cash] over total assets	(Cui et al., 2018)
Profitability	ROA	Net profit after interest and tax over total assets	(Menla Ali et al., 2024)
Operating cash flow	CF	Earnings befor interest, tax, depreciation, and amortization over total assets	(Joshi & Joshi, 2024)

as follows:

3.3. Research Models

Three regression models have been developed to examine the impact of a CEO’s power, confidence, and tenure on ESG performance within the context of the Egyptian market. Based on the three examined traits of CEOs, the research models are developed as follows:

3.3.1. Model 1: The Impact of CEO’s Power on ESG

$$\begin{array}{cc}{\mathrm{E}\mathrm{S}\mathrm{G}}_{\mathrm{i},\mathrm{t}}={\mathsf{\beta }}_0+{\mathsf{\beta }}_1\hfill & {\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_2 {\mathrm{F}\mathrm{S}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_3 {\mathrm{L}\mathrm{n}\_\mathrm{F}\mathrm{L}\mathrm{T}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_4 {\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_5 {{\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2}_{\mathrm{i},\mathrm{t}}\hfill \\ & +{\mathsf{\beta }}_6 {\mathrm{R}\mathrm{O}\mathrm{A}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_7 {\mathrm{O}\mathrm{C}\mathrm{F}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_8 \mathrm{Y}\mathrm{e}\mathrm{a}\mathrm{r} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}\hfill \\ & +{\mathsf{\beta }}_9 \mathrm{I}\mathrm{n}\mathrm{d}\mathrm{u}\mathrm{s}\mathrm{t}\mathrm{r}\mathrm{y} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}+{\mathsf{\epsilon }}_{\mathrm{i},\mathrm{t}}\hfill \end{array}$$

(2)

3.3.2. Model 2: The Impact of CEO’s Confidence on ESG

$$\begin{array}{cc}{\mathrm{E}\mathrm{S}\mathrm{G}}_{\mathrm{i},\mathrm{t}}={\mathsf{\beta }}_0+{\mathsf{\beta }}_1\hfill & {\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{i}\mathrm{d}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_2 {\mathrm{F}\mathrm{S}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_3 {\mathrm{L}\mathrm{n}\_\mathrm{F}\mathrm{L}\mathrm{T}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_4 {\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_5 {{\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2}_{\mathrm{i},\mathrm{t}}\hfill \\ & +{\mathsf{\beta }}_6 {\mathrm{R}\mathrm{O}\mathrm{A}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_7 {\mathrm{O}\mathrm{C}\mathrm{F}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_8 \mathrm{Y}\mathrm{e}\mathrm{a}\mathrm{r} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}\hfill \\ & +{\mathsf{\beta }}_9 \mathrm{I}\mathrm{n}\mathrm{d}\mathrm{u}\mathrm{s}\mathrm{t}\mathrm{r}\mathrm{y} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}+{\mathsf{\epsilon }}_{\mathrm{i},\mathrm{t}}\hfill \end{array}$$

(3)

3.3.3. Model 3: The Impact of CEO’s Tenure on ESG

$$\begin{array}{cc}{\mathrm{E}\mathrm{S}\mathrm{G}}_{\mathrm{i},\mathrm{t}}={\mathsf{\beta }}_0+{\mathsf{\beta }}_1\hfill & {\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{T}\mathrm{e}\mathrm{n}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_2 {\mathrm{F}\mathrm{S}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_3 {\mathrm{L}\mathrm{n}\_\mathrm{F}\mathrm{L}\mathrm{T}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_4 {\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_5 {{\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2}_{\mathrm{i},\mathrm{t}}\hfill \\ & +{\mathsf{\beta }}_6 {\mathrm{R}\mathrm{O}\mathrm{A}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_7 {\mathrm{O}\mathrm{C}\mathrm{F}}_{\mathrm{i},\mathrm{t}}+{\mathsf{\beta }}_8 \mathrm{Y}\mathrm{e}\mathrm{a}\mathrm{r} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}\hfill \\ & +{\mathsf{\beta }}_9 \mathrm{I}\mathrm{n}\mathrm{d}\mathrm{u}\mathrm{s}\mathrm{t}\mathrm{r}\mathrm{y} \mathrm{F}\mathrm{i}\mathrm{x}\mathrm{e}\mathrm{d} \mathrm{E}\mathrm{f}\mathrm{f}\mathrm{e}\mathrm{c}\mathrm{t}\mathrm{s}+{\mathsf{\epsilon }}_{\mathrm{i},\mathrm{t}}\hfill \end{array}$$

(4)

where:

• ESG_i,t is the ESG disclosure score of firm_i during year_t;
• ${\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{P}\mathrm{o}\mathrm{w}\mathrm{e}\mathrm{r}}_{\mathrm{i},\mathrm{t}}$ is the CEO power of firm_i during year_t;
• ${\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{C}\mathrm{o}\mathrm{n}\mathrm{f}\mathrm{i}\mathrm{d}}_{\mathrm{i},\mathrm{t}}$ is the CEO confidence of firm_i during year_t;
• ${\mathrm{C}\mathrm{E}\mathrm{O}\mathrm{T}\mathrm{e}\mathrm{n}}_{\mathrm{i},\mathrm{t}}$ is the CEO power of firm_i during year_t;
• FS_i,t is the size of firm_i during year_t;
• FLT_i,t is firm listing tenure of firm_i during year_t;
• TANG_i,t is the tangibility percentage of firm_i during year_t;
• ROA_i,t is the return on assets of firm_i during year_t;
• OCF_i,t is the operating cash flow of firm_i during year_t.

4. Results

4.1. Descriptive Statistics

Table 4. Descriptive Statistics.

Panel A: Descriptive Statistics for Continuous Variables
Variable	Obs.	Mean	Std. Dev.	Min	Max
ESG	330	122.1	9.465	101.707	149.869
CEOConfid	330	0.079	0.215	0	0.696
CEOTenure	330	3.103	1.886	1	11
FS	330	21.57	1.615	16.821	25.502
Ln FLT	330	2.823	0.557	0	4.127
Tang	309	0.386	0.217	0.01	0.918
ROA	327	0.05	0.121	−0.228	0.341
OCF	330	0.045	0.188	−1.454	0.564
Panel B: Frequencies for Dummy Variable
Variable	Modality	Frequency	Percentage	Cumulative
CEOPower	0	139	42.12	42.12
	1	191	57.88	100.00
Total		330	100.00

This table shows all summary statistics based on the observations. Where ESG is the firm’s ESG/EGX100 score. CEOConfid is the CEO’s overconfidence. CEOTenure is the CEO’s tenure. FS is the firm size. Ln FLT is the firm listing tenure. Tang is the tangibility ratio. ROA is the return on assets. OCF is the net operating cash flow ratio. CEOPower is an indicator variable for CEO power. Panel (A) reports descriptive statistics. Panel (B) reports frequencies.

presents the summary for all variables included in the research models, over the research period from 2014 to 2022.

Table 4 shows the summary for the study variables, presented under two panels, (A) and (B). In detail, Panel (A) includes the continuous variables and Panel (B) includes the frequencies regarding the dummy variable. In addition, to solve the effect of outliers, the continuous variables used in this research have been winsorized at 3%.

Concerning the ESG as the main dependent variable of interest, it shows homogeneity among the firms as evidenced by the low standard deviation (9.465) compared to the mean (122.1). Such convergence arises from the incorporation of all sampled firms in the ESG/EGX100 scoring index. The narrow range between the minimum value (101.707) and the maximum value (149.869) further supports the low variations among the firms in terms of their ESG scores. This tight clustering of scores suggests a certain level of uniformity in ESG practices or disclosures within the sample.

Regarding CEO traits, the CEOs of the average sampled firms incorporated into the ESG/EGX100 scoring index are overconfident by 0.079, which reflects the deviation from the industry’s investment levels due to the positive changes in overinvestment. The standard deviation reveals a wide dispersion (0.215) around the mean. The wide range further reinforces the heterogeneity among the firm-year observations. The minimum value of (zero) indicates the existence of rationally confident CEOs who align with the industry’s investment levels, while the maximum value of (0.696) indicates the existence of overly confident CEOs who overinvest compared to their industry peers.

In terms of CEO tenure as another CEO characteristic, it has a mean value of (3.103), meaning that the average duration that a person serves as the chief of the board for the same firm falls within the span of 3 to 4 years. The standard deviation of (1.886) shows relatively high diversity in the CEOs’ tenure tracks. A range of 10 years between the minimum and maximum values further emphasizes the relative heterogeneity across the firms under study. Within the context of the firms listed in the ESG/EGX100 scoring index, there exists fresh-tenured CEOs having served for just one year with the same firm, along with long-tenured CEOs who have been in the same firm for up to 11 years.

Concerning the firm financial attributes, firm size (FS) has a standard deviation of (1.615), which is small relative to the mean (21.57) due to adopting the natural logarithm of the book value of assets, which caused smoothing in firm size among the sampled firms, which are listed in the ESG/EGX100 scoring index. Therefore, FS shows a range between (25.502) as a maximum value (25.502) and (16.821) as a minimum value.

Firm listing tenure shows a relatively small standard deviation of (0.557) relative to the mean (2.823) due to applying the natural logarithm on the number of years since the firm was listed on the stock market, which caused smoothing in firm listing tenure among the sampled firms. Therefore, firm listing tenure shows a narrow range between (4.127) as a maximum value and (0) as a minimum value.

The average ratio of tangibility (Tang) is (0.386), illustrating that the fixed asset proportion—on average—in the firms listed in the ESG/EGX100 scoring index is approximately 38.6% with a standard deviation (0.217) which is high compared to the mean and reflecting the relatively large differences among the firms. In addition, the maximum value of (0.918) reflects that some firms are capital-intensive firms. Also, the minimum value (0.01) indicates that other firms tend to be labor-intensive firms.

Regarding profitability, the return on assets (ROA) average is (0.05), which means that the sampled firms incorporated into the ESG/EGX100 scoring index—on average—achieve ROA of around 5%. The maximum value (0.341) indicates that some firms achieve a positive rate of ROA, reaching up to 34.1%, and optimally exploit their resources. Conversely, the minimum value is negative (−0.228), indicating that other firms have a negative rate of return on their assets. Consistent with the wide range, there is a large dispersion around the mean, as shown by the standard deviation (0.121).

The net operating cash flows ratio (OCF) has a mean of (0.045), illustrating that firms listed in the ESG/EGX100 scoring index—on average—achieve positive net OCF. However, the maximum value (0.564) reveals the ability of some firms to generate a net cash flow (positive) from their main operations. Also, its minimum value is negative (−1.454), which reflects the failure of some firms to generate cash inflows to cover the related cash outflows, resulting in a negative net OCF. In addition, this large range aligns with the large standard deviation (0.188), both suggesting large variations among the firms.

As observed in Panel (B) of Table 4, the CEO power is proxied by a composite approach (integrates CEO duality and equity dispersion), accounting for 57.88% (n = 191) of the sampled firms listed in the ESG/EGX100 scoring index. Despite this, the Egyptian Financial Supervisory Authority (EFSA) issued Decision No. (47) in 2020, which prohibits CEOs’ duality. However, EFSA has given the listed firms until 2021 or, at maximum, by the next board election to accommodate this rule.

In a nutshell, the descriptive statistics of the sampled firms incorporated into the ESG/EGX100 scoring index reveal a relative heterogeneity. As such, the sampled firms include rationally confident CEOs compared to overly confident CEOs, fresh-tenured CEOs compared to long-tenured CEOs, labor-intensive firms compared to capital-intensive firms, profitable firms compared to unprofitable firms that struggle to operate, and, finally, firms suffering from more cash outflows than inflows from operations compared to firms having positive net cash flow from operations. However, FS and FLT stand out as highly homogenous variables due to the utilization of the natural logarithm, which smooths the dataset.

4.2. Two-Sample t-Test with Equal Variances

To examine whether the corporate ESG performance varies across two different samples of powered CEOs and non-powered CEOs, the two-sample t-test with equal variances is used to compare the means of two independent datasets, as shown in

Table 5. Two-sample t-test with equal variances.

Variable	Powered CEOs (1)	Non-Powered CEOs (2)	Diff. (3)	p-Value for diff < 0 (4)	p-Value for diff > 0 (5)
ESG	124.0539	119.4155	−4.63835	0.0000	1.0000

This table reports the differences between the means for a sample of firms with powered CEOs and a sample of firms with non-powered CEOs. Where Column 1 reports the mean for the powered CEOs’ sample. Column 2 reports the mean for the non-powered CEOs’ sample. Column 3 reports the difference in means between the sample of powered CEOs and the sample of non-powered CEOs, column 4 reports the p-value for the negative difference, and column 5 reports the p-value for the positive difference. ESG is the firm’s ESG/EGX100 score.

.

As observed in Table 5, the sample of powered CEOs has a mean of 124.0539, while the sample of non-powered CEOs has a mean of 119.4155. The difference in means between the sample of powered CEOs and the sample of non-powered CEOs is −4.63835. Since the p-value for diff < 0 is 0.0000, it indicates strong evidence to reject the null hypothesis in favor of the alternative hypothesis that the mean for the powered CEOs sample is greater than the mean for the non-powered CEOs sample. The results suggest that there is a statistically significant difference in the ESG performance between the powered CEOs sample and the non-powered CEOs sample, with the mean being larger for powered CEOs compared to non-powered CEOs. This significant difference between the two means is greater than a difference attributable to randomness or sampling error, indicating that the observed difference is more likely to be due to the statistical characteristics of two independent sets of observations.

4.3. Correlation Analysis Results

The Pearson correlation matrix, as shown in

Table 6. Correlation Matrix (Pairwise Correlations).

Variables	ESG	CEOConfid	Ln_Ten	FS	Ln_FLT	Tang	ROA	OCF
ESG	1.000
CEOConfid	0.186 ***	1.000
	(0.001)
Ln_Ten	−0.043	0.056	1.000
	(0.438)	(0.310)
FS	0.358 ***	0.175 ***	−0.070	1.000
	(0.000)	(0.001)	(0.204)
Ln_FLT	−0.239 ***	0.000	0.012	0.062	1.000
	(0.000)	(0.994)	(0.828)	(0.264)
Tang	−0.019	−0.121 **	−0.003	−0.030	−0.260 ***	1.000
	(0.735)	(0.034)	(0.958)	(0.597)	(0.000)
ROA	0.203 ***	0.132 **	−0.092 *	0.343 ***	−0.126 **	−0.307 ***	1.000
	(0.000)	(0.017)	(0.099)	(0.000)	(0.023)	(0.000)
OCF	0.169 ***	0.021	−0.065	0.433 ***	−0.071	−0.021	0.622 ***	1.000
	(0.002)	(0.709)	(0.236)	(0.000)	(0.195)	(0.713)	(0.000)

This table shows the Pearson correlations among variables of interest. Where ESG is the firm’s ESG/EGX100 score. CEOConfid is the CEO’s overconfidence. CEOTen is the CEO’s tenure. FS is the firm size. Ln_FLT is the firm listing tenure. Tang is the tangibility ratio. ROA is the return on assets. OCF is the net operating cash flows ratio. Levels of significance are presented as follows: *** p < 0.01, ** p < 0.05, * p < 0.1.

, provides a preliminary understanding of the linear relationships among the variables. Correlation coefficients are employed to determine both the direction and strength of the linear relationship.

The Pearson’s correlation matrix reported in Table 6 reveals that ESG has a significant positive linear nexus with CEOConfid, while ESG has an insignificant linear nexus with Ln_Ten.

Concerning the firm financial attributes, ESG has a significant positive linear association with FS, ROA, and OCF. In contrast, ESG has a significant negative linear association with Ln_FLT, while ESG has an insignificant linear association with Tang.

Based on the detection of multicollinearity among the variables in all models, the results show no multicollinearity issues among all variables. The highest correlation coefficient is found between ROA and OCF, which is 0.622. Also, Pearson’s correlation coefficients do not account for non-linear relationships. Thus, it is important to consider the curvilinearity in the regression analysis.

4.4. Hypotheses Testing Results

Table 7. The Impact of CEO Power, Confidence, and Tenure on ESG.

Panel (A): The OLS Goodness of Fit Tests
Variable	(Model 1)	(Model 2)	(Model 3)
ROA	2.141	2.16	2.139
OCF	1.823	1.843	1.825
Tang	1.319	1.325	1.319
Ln FLT	1.152	1.149	1.149
FS	1.094	1.126	1.086
CEOPower	1.014
CEOConfid		1.072
Ln Ten			1.015
Mean VIF	1.424	1.446	1.422
Heteroskedasticity	Prob > chi2 = 0.3346	Prob > chi2 = 0.5351	Prob > chi2 = 0.6870
Omitted variables	Prob > F = 0.0037	Prob > F = 0.0000	Prob > F = 0.0000
Autocorrelation	Prob > F = 0.2098	Prob > F = 0.1843	Prob > F = 0.1828
Panel (B): The Fitted Generalized Least Squares Regression Results
Variable	(Model 1)	(Model 2)	(Model 3)
CEOPower	3.731 ***
CEOConfid		4.993 **
Ln_Ten			−0.528
FS	2.041 ***	2.035 ***	2.195 ***
Ln_FLT	−5.469 ***	−5.629 ***	−5.659 ***
Tang	26.799 ***	30.618 ***	30.885 ***
Tang2	−33.977 ***	−38.68 ***	−38.893 ***
ROA	−3.062	−5.568	−4.434
OCF	9.215 *	11.301 **	9.989 *
Year fixed effect	Yes	Yes	Yes
Industry fixed effect	Yes	Yes	Yes
Number of obs	306	306	306
Prob > F	0.000	0.000	0.000
R-squared	0.367	0.344	0.333
AIC	2148.730	2159.951	2164.809
Panel (C): The Turning Points of Non-linear Effects
Variable	(Model 1)	(Model 2)	(Model 3)
Tang	${\displaystyle \frac{\mathrm{Coefficient} \mathrm{of} \mathrm{Tang}}{-\left(\mathrm{Coefficient} \mathrm{of} {\mathrm{Tang}}^2\right)\ast 2}}$ = 0.3943697207	${\displaystyle \frac{\mathrm{C}\mathrm{o}\mathrm{e}\mathrm{f}\mathrm{f}\mathrm{i}\mathrm{c}\mathrm{i}\mathrm{e}\mathrm{n}\mathrm{t} \mathrm{o}\mathrm{f} \mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}{-\left(\mathrm{C}\mathrm{o}\mathrm{e}\mathrm{f}\mathrm{f}\mathrm{i}\mathrm{c}\mathrm{i}\mathrm{e}\mathrm{n}\mathrm{t} \mathrm{o}\mathrm{f} {\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2\right)\ast 2}}$ = 0.3957859359	${\displaystyle \frac{\mathrm{C}\mathrm{o}\mathrm{e}\mathrm{f}\mathrm{f}\mathrm{i}\mathrm{c}\mathrm{i}\mathrm{e}\mathrm{n}\mathrm{t} \mathrm{o}\mathrm{f} \mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}{-\left(\mathrm{C}\mathrm{o}\mathrm{e}\mathrm{f}\mathrm{f}\mathrm{i}\mathrm{c}\mathrm{i}\mathrm{e}\mathrm{n}\mathrm{t} \mathrm{o}\mathrm{f} {\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2\right)\ast 2}}$ = 0.3970508832

The table shows the results of models 1, 2, and 3. Where ESG is the firm’s ESG/EGX100 score. CEOPower is an indicator variable for CEO power. CEOConfid is the CEO’s overconfidence. CEOTen is the CEO’s tenure. FS is the firm size. Ln FLT is the firm listing tenure. Tang is the tangibility ratio. ${\mathrm{T}\mathrm{a}\mathrm{n}\mathrm{g}}^2$ is the quadratic value of Tang. ROA is the return on assets. OCF is the net operating cash flow ratio. Panel (A) shows the results of the OLS for models 1, 2, and 3. Panel (B) shows the GLS results for models 1, 2, and 3. Panel (C) shows the turning points of the non-linear effects in models 1, 2, and 3. In models 1, 2, and 3, the dependent variable is ESG. Model 1 shows the GLS results of the impact of CEOPower on ESG. Model 2 shows the GLS results of the impact of CEOConfid on ESG. Model 3 shows the GLS results of the impact of CEOTen on ESG. Levels of significance are presented as follows: *** p < 0.01, ** p < 0.05, * p < 0.1.

shows the regression analysis results by providing three main panels: Panel (A) reports the results of the OLS goodness of fit tests to assess the validity of the research models, Panel (B) reports the fitted GLS regression results, and Panel (C) reports the turning points of the non-linear effects in research models 1, 2, and 3.

The research models are estimated using the ordinary least squares (OLS) method and the generalized least squares (GLS) method, which considers any potential issues that the OLS method may encounter. Before accepting the research models as reliable models, there are some goodness of fit tests (multicollinearity, heteroskedasticity, omitted variables, and autocorrelation) that should be conducted to ensure that the statistical techniques fit the data.

Panel (A) of Table 7 shows that there is no multicollinearity among the variables of models 1, 2, and 3. As Aldrich (2023) stated, “multicollinearity exists when the VIF of any independent variable exceeds 10”. Therefore, there is no multicollinearity among the explanatory variables included in the research models concerning the impact of CEO power, confidence, and tenure on ESG. Furthermore, there are no serious heteroskedasticity issues in all research models, because the p-values of the Breusch–Pagan/Cook–Weisberg test for heteroskedasticity are greater than 5% in models 1, 2, and 3. Moreover, there are no autocorrelation issues in all the research models because their p-values of the Wooldridge test for autocorrelation in panel data are greater than 5% in models 1, 2, and 3. Relating to the results of the Ramsey RESET test for omitted variables, all research models are misspecified because their p-values of the omitted variables test are less than 5%.

Panel (B) of Table 7 shows the fitted GLS regression results of the research models concerning the impact of CEO power, confidence, and tenure on ESG. The GLS method considers the econometric problem of misspecification in models 1, 2, and 3. In addition, the fitted models consider the potential non-linear relationships. All research models are significant since their Prob > F is less than 0.05. According to the value of R-squared, the explanatory variables included in models 1, 2, and 3 have explained around 36.7%, 34.4%, and 33.3% of the corporate ESG performance, respectively. According to the Akaike information criterion (AIC) as a criterion for model selection, the models that provide the highest to lowest level of fit to the employed dataset are models 1, 2, and 3, respectively.

Concerning CEOs’ traits, CEOPower and CEOConfid have a significant positive linear effect on ESG as observed in models 1 and 2, respectively. Concentrated power that stems from CEO duality and equity dispersion may lead to quicker decision making and more cohesive strategic direction. In the context of ESG performance, a powerful CEO may have greater influence over the board and be better positioned to drive ESG-related agendas and initiatives. Furthermore, overconfident CEOs may be more willing to invest in long-term projects that positively impact the ESG. Also, CEOTen has no significant effect on ESG as shown in model 3.

With regard to the impact of CEO power on ESG, the regression results of model 1 support Hypothesis (1), indicating that CEO power positively impacts ESG performance in the Egyptian context. Concerning the second research hypothesis, positing that a positive impact of CEO confidence on ESG performance is supported by the regression results of model 2, it is indicated that an increase in CEOConfid positively impacts ESG by a coefficient of 4.993 at a significance level of less than 5%. Thus, Hypothesis (2) is accepted. Relating to the impact of CEO tenure on ESG, the regression results of model 3 fail to support the third research hypothesis due to the lack of a significant effect of CEO tenure on ESG. Accordingly, Hypothesis (3) is rejected.

In terms of the firm financial attributes, evidence is mixed between positive, negative, and other. Accordingly, Hypothesis (4) is rejected. FS has a significant positive linear effect on ESG as shown in models 1, 2, and 3. Larger firms often have more extensive resources and capabilities at their disposal, which enables them to invest in ESG initiatives. Also, larger firms typically have greater visibility and are subject to more public scrutiny. As a result, they may face increased pressure from stakeholders to improve their ESG performance. Meanwhile, Ln_FLT has a significant negative linear effect on ESG as shown in models 1, 2, and 3. Firms that have been listed for a long time may become complacent in their ESG efforts. They might rely on their established reputation and history rather than actively pursuing continuous improvement in ESG performance.

From Panels (B) and (C) of Table 7, tangibility shows a curvilinear effect on ESG. As such, all research models’ results show that the coefficient of Tang is significantly positive and the coefficient of Tang² is significantly negative. Thus, the pattern of the curvilinear effect of Tang on ESG takes the form of an inverted U-shaped curve. This means that Tang has an initial enhancing effect on ESG until the increase in Tang reaches a certain threshold (around 39.43% in model 1, 39.58% in model 2, and 39.71% in model 3). This is considered a turning point where ESG decreases with the further increase in Tang.

A possible explanation for the significant positive linear effect of OCF on ESG can be that firms with a strong OCF ratio are financially stable and have a reliable source of cash inflows from their operations. This financial stability can provide the foundation for sustainable investments in ESG. Continuing with the firm financial attributes, profitability as measured by the ROA has no significant effect on ESG as shown in models 1, 2, and 3.

5. Discussion

ESG is not about marking a box on a checklist, “Congratulations, the firm commits to ESG requirements”. It is about truly integrating ESG principles into the firm’s vision and maintaining sustained outcomes inclusively to create long-term social trust. In this regard, our research aimed to find evidence for two main questions: Do firm financial attributes impact ESG performance in the Egyptian context? Do CEO power, confidence, and tenure impact ESG performance in the Egyptian context? In this regard, we performed an empirical study on 43 firms listed on the EGX from 2014 to 2022 and developed three research models.

In terms of firm financial attributes, previous literature provided unclear evidence for the impact on ESG performance. So, we tested this academic area in the Egyptian context, and our results also provided mixed evidence, such as (A) there is a positive impact of both firm size and operating cash flow on ESG performance. This result was in line with the extant literature (Modugu, 2020; Sharma et al., 2020). (B) In consistence with T. Tang and Yang (2024), we found a negative impact of firm listing tenure on ESG performance. (C) There is no significant impact of profitability on ESG. This result mainly goes against the main wave in the literature (Abdul Rahman & Alsayegh, 2021; Crespi & Migliavacca, 2020). (D) Assets’ tangibility reveals a curvilinear impact on ESG and takes the form of an inverted U-shaped curve, and this also provides new evidence that has not yet appeared in the literature.

In terms of CEO traits, several studies in the accounting literature tried to determine these complex relations but, in the end, provided mixed evidence. We examined this arguable area of the CEO-ESG nexus in the Egyptian context, and our results also provided mixed evidence, such as (A) CEO power and confidence have a significant positive linear effect on ESG. This result is in line with the extant literature (Li et al., 2018; Zribi & Boufateh, 2020; Zhao et al., 2023). (B) The lack of a significant effect of CEO tenure on ESG, and this result was in contrast to the literature (Kim & Kim, 2023; Triyani et al., 2020).

Based on the above, we summarized our evidence from the Egyptian business environment in the following

Table 8. Summary of evidence from the Egyptian stock market.

Variable	Sub-Variables	Positive	Negative	Other	Hypotheses
CEO	Power	√			Hypothesis (1) accepted
	Confidence	√			Hypothesis (2) accepted
	Tenure			√	Hypothesis (3) rejected
Firm financial attributes	Firm size	√			Hypothesis (4) rejected
	Firm listing tenure		√
	Tangibility			U-shaped curve
	Profitability			√
	Operating cash flow	√

.

6. Conclusions

ESG in the Egyptian business environment has a positive lens based on the formal reports of many international bodies, despite being in its early stages, since the first formal step of establishing the ESG index in 2010. The Egyptian national economy stands to benefit from firms’ adoption of ESG, besides the major reforms in the business environment from the legislative side. In fact, the Egyptian path in ESG will have many challenges, but with stakeholders’ engagement, firms’ clear vision, and legal proactive measures, Egypt can soon be a unique case of ESG in Africa.

The CEO is considered the man with the flag in any firm, and his traits can shape the firm’s behavior in a business environment. From this point of view, our research investigated the impact of CEO traits such as power, confidence, and tenure on ESG performance within the Egyptian context. The results provide new insights into the significant influence of the firm’s CEO in shaping its sustainability practices. Based on our investigation, high ESG performance is associated with a powerful CEO with highly confident attributes, but at the same time, there is no significant association between ESG and CEO tenure. In addition, we found that there are mixed impacts of firm financial attributes on ESG performance, from positive (firm size and operating cash flow) to negative (firm listing tenure), insignificant (profitability), and a U-shaped curve (assets tangibility).

The social implications of our research can be summarized in many points as follows: (a) improved sustainability practices by highlighting the influence of CEO attributes on the level of ESG disclosure. (b) Enhancing firm reputation and stakeholder trust by good ESG performance. (c) Enhancing economic growth and development by promoting sustainable business practices. (d) Addressing social and environmental challenges by focusing on ESG performance, such as climate change and poverty. In addition, the practical implications can be summarized as follows: (a) Firm should foster a strong sustainability culture with their strategies and integrate ESG considerations into their operations. (b) Enhancing ESG-focused investment strategies, where investors can use our findings to support their investment decisions by focusing on firms with CEOs who are committed to sustainability; this could involve incorporating ESG factors into investment lensing. (e) Policymakers can create a regulatory environment that supports sustainable practices; this could involve implementing mandatory ESG reporting requirements and holding CEOs accountable for the impact of their ESG practices.

Finally, this research contributed to the existing literature about ESG by providing new evidence. At the same time, the use of the Egyptian stock market as a sample of emerging markets, while acceptable and practical due to the volume of observations and the covered period from 2018 to 2022, may limit the applicability of the study. So, this academic area still requires more research in several directions. First, future studies could compare between regions to investigate global variations in the critical relationship between ESG performance and CEO traits. Second, examining the effect of contextual factors (e.g., cultural norms and regulatory framework) as moderating factors on the CEO and ESG nexus would be helpful for a better understanding. Third, longitudinal studies could capture the long-term nexus of CEO traits and ESG performance over time to evaluate any changes in a firm’s sustainability adoption.