The Perverse Nexus: CEO Prevention Focus, Shareholders, and Environmental Misconduct

Abstract

While prevention-focused leadership is generally associated with risk aversion and adherence to norms, the complex interplay between a CEO's motivational focus and the pervasive pressure for shareholder value maximization can paradoxically increase corporate environmental misconduct. This creates a critical dilemma for corporate governance and sustainability efforts. This study seeks to understand under what conditions a CEO's prevention focus leads to increased environmental misconduct and how the prioritization of shareholder value mediates or moderates this relationship. It also explores the implications for corporate governance frameworks aimed at promoting environmental responsibility. Quantitative empirical analysis using panel data on S&P500 firms, complemented by qualitative case studies, would be suitable. This research would significantly contribute to regulatory focus theory and corporate social responsibility (CSR) literature by demonstrating a nuanced, context-dependent effect of CEO motivational focus. Practically, it would inform corporate boards and policymakers on the importance of aligning incentive structures and fiduciary duties to prevent unintended negative environmental outcomes.