Corporate environmental governance and leadership transitions: How CEO succession patterns drive ESG performance misalignment in fortune 1000 companies

Abstract

This study investigates the environmental implications of corporate leadership transitions by examining how CEO succession patterns influence the alignment between environmental, social, and governance (ESG) reputation and actual environmental performance. Using a comprehensive dataset of Fortune 1000 companies in 2024, we develop a novel peer-relative environmental performance misalignment index that combines external ESG reputation rankings with quantitative environmental and financial performance metrics. Our findings reveal that companies led by professional (non-founder) CEOs exhibit 23.7% higher environmental performance misalignment scores compared to founder-led enterprises, indicating a greater tendency toward "greenwashing" behaviors. This relationship remains statistically and economically significant after propensity-score matching and controlling for firm characteristics, industry effects, and financial performance. The environmental performance gap is most pronounced in resource-intensive industries, including food production, financial services, and defense sectors, particularly among companies experiencing financial distress. Additional analyses demonstrate that female CEO leadership significantly reduces environmental performance misalignment by 18.4%, supporting emerging evidence that gender diversity in corporate governance enhances environmental transparency and accountability. These findings have important implications for environmental policy, corporate governance, and sustainable investment strategies, suggesting that leadership succession patterns are a critical but underexplored determinant of corporate environmental behavior and climate-related disclosure quality.