| Abstract [eng] |
Investors are increasingly analyzing not only financial indicators but also paying considerable attention to whether a company conducts its activities with regards to the sustainability aspect, which includes environmental, social, and governance factors. The growing relevance of sustainability is evidenced by the increasing number of studies on this topic in the scientific literature, as well as by newly enacted laws, restrictions and requirements. One of the key figures organizing company's operations and responsible for its strategy is the Chief Executive Officer (CEO). According to Hambrick and Mason (1984) theory, the personal and demographic characteristics of CEO may be one of the decisive factors when making decisions about the (non) integration of sustainability into the company's strategy. Existing studies often evaluate relationships between sustainability aspect and CEO's profile using regression analysis but not with articles that have been found examining the combination of variables during portfolio formation and its impact on portfolio performance. The object of the study – the formation of an investment portfolio considering the aspect of sustainability and the CEO profile. The aim of the study – to determine whether the sustainability aspect and the CEO's profile are compatible with the investment portfolio formation process and what impact they have on portfolio efficiency. In many scientific studies a positive impact of the sustainability aspect on a company's operations, profitability, stability indicators and stock price is identified. There is a need to integrate the ESG aspect into investment processes, thus enabling investors to discover potential companies generating higher investment returns. Many studies claim that the characteristics of CEO determine different aspects of corporate governance and strategic decision-making which can influence the development of an organization's sustainable activities. A significant relationship was established between CEO's characteristics and company's financial performance, stock returns and innovation implementation, this indicates that the analysis of the CEO's profile can be particularly useful before making investment decisions. After analyzing the scientific literature, one of the most popular methods of integrating the ESG aspect in the portfolio formation process is the best selection method where the company's ESG score is often the main criteria. In order to determine whether the assessment of the ESG aspect benefits the investor, regression analysis or the method of forming an investment portfolio is commonly used in the literature. In order to identify the CEO profile characteristics with the strongest relationship one of the most popular research methods is panel regression. During this research analyzed data from companies included in the "Eurostoxx 50" index and their data from 2015 to 2022. Six different portfolios were formed using the equal-weight method – some were based solely on the evaluation of the ESG aspect while the others additionally included the most significant CEO characteristics. The only variable describing the CEO's profile that significantly affects the stock price is the CEO’s tenure. It has been found that it is beneficial for an environmentally conscious investor to integrate the CEO's tenure criteria into the formation process of a sustainable portfolio as this leads to higher portfolio efficiency. If the investor's main goal is to maximize profitability, then the highest annual return would be achieved by forming a portfolio from companies with the lowest ESG ratings. |
