CEO International Experience and Carbon Emissions Risk Management in Indonesian Companies

Abstract

Purpose - This study aims to examine the influence of CEO international experience, disaggregated into foreign education, work experience at a foreign/multinational company, and foreign nationality, on carbon emissions risk management in Indonesian companies.

Design/methodology/approach - The sample consists of a balanced panel of  firm-year observations obtained from 51 companies listed on the Indonesia Stock Exchange over 5 years (2020-2024) or 255 data observation, using Ordinary Least Squares (OLS) regression to test the research hypotheses.

Findings - The empirical results indicate that, when CEO international experience is disaggregated into its three dimensions, CEO work experience at a multinational company has a positive and significant effect on the Carbon Emissions Management Score, while CEO foreign education has, counter-intuitively, a negative and significant effect. CEO foreign nationality has no significant effect. Taken jointly as a single composite variable, however, CEO international experience shows no significant effect on the Carbon Emissions Management Score, a null result that conceals rather than reflects the absence of any underlying relationship, since it simply averages out two opposing effects.

Research limitations/implications - This study was limited to Indonesian companies with complete MSCI ESG data coverage up to 2024, given data availability constraints in the Osiris database for subsequent years; therefore, future study is needed to extend the observation period and incorporate firm-level control variables.

Practical implications - This study enlightens nomination committees and regulators from a corporate governance perspective. In recruiting or evaluating CEOs to strengthen climate risk governance, direct work experience abroad or at a foreign company appears to be a more relevant indicator than a foreign educational background alone.

Originality/value - This study provides a disaggregated view of CEO international experience by developing and testing a model that separates education, work experience, and nationality, revealing that their effects on carbon emissions risk management run in opposite directions in the context of Indonesian corporate governance.