In times of accelerating environmental crises, such as climate change, firms’ engaging in harmful environmental practices is particularly problematic. To date, limited research has investigated the role of CEOs’ motivational focus in environmental misconduct, despite ample evidence that CEOs determine a large share of variance in their firms’ CSR behaviors. Drawing on regulatory focus theory, one would expect a prevention-focused CEO to lead to less environmental misconduct. However, given wide-spread pressures of a rival fiduciary duty towards the firm’s shareholders, we challenge this assumption. We argue that in situations of conflicting environmental and financial targets, prevention focused CEOs may actually increase the likelihood of corporate misconduct. Investigating S&P500 firms, we find no direct association between CEO prevention focus and environmental misconduct. Rather we find, in line with our argument, that CEO prevention focus is associated with an increase in environmental misconduct when shareholder value maximization is privileged. Our study contributes to the understanding of micro-level antecedents of environmental misconduct and underscores the importance of considering contextual factors to fully understand the impact of CEO regulatory foci on firm-level outcomes.
