We investigate the effect of CEO Career Horizon on Corporate Environment Responsibility (CER). CEO Career Horizon reflects the time period that the CEO is expected to stay in office and is an inverse proxy for the short-termism or managerial myopia problem, whereas CER can be defined as the strategies firms apply to deal with environmental risks and opportunities. Though undeniably beneficial for both firms and the planet in the long run, CER initiatives may pose potential short-term costs to CEOs’ personal wealth. Using a sample of over 1,000 U.S. firms in the period of 2007-2020, we find consistent evidence that CEO Career Horizon has a positive effect on CER. Our results are robust to concerns of selection bias, omitted variable bias, and reverse causality and remain unchanged after deploying propensity-score matching and entropy balance techniques, an instrumental variables (IV) design, and incorporating a set of multidimensional fixed effects. The results are also robust to alternative proxies of CEO Career Horizon. Overall, our results suggest that CEO with longer career horizon and early tenured are those more likely to invest in CER. We contribute to the ongoing discussion on how companies exhibit diverse responses to risk management, specifically concerning climate change, arising from distinct personal preferences of decision-makers.
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