Facial features and environmental strategy: How aggressive CEOs respond to regulatory changes in carbon emissions?

Abstract

Do aggressive CEOs adapt to new regulatory environments more aggressively? Leveraging the staggered finalisations of State Climate Adaptation Plans (SCAPs) in the United States as a source of exogenous climate regulatory risks, we examine the impact of a male CEO’s facial-width-to-height ratio (fWHR) on corporate carbon emissions post-SCAP finalisation. Drawing from neuroendocrinology literature, fWHR is associated with aggressiveness in pursuing higher social status and self-interest. Our findings show that firms led by high-fWHR CEOs reduce carbon emissions following SCAP finalisation, while those with low-fWHR CEOs exhibit no change. Channel analysis suggests that this emission reduction is driven by a greater tendency to adopt carbon reduction policies. The effect is more pronounced in firms with powerful CEOs, those based in collectivist states, and those facing lower SCAP uncertainty. Despite lowering carbon emissions, high-fWHR CEO-led firms do not achieve better ESG ratings post-SCAP finalisation. This paradox arises from their lower public commitments to emission reduction, suggesting a reduced tendency toward greenwashing. By establishing a novel linkage between CEOs’ fWHR and corporate climate strategies, this study provides new insights into the role of CEO personality traits in shaping corporate responses to climate regulatory risks.