In recent years, attention to sustainability in corporate decision-making has increasingly increased, with stakeholders emphasizing the importance of long-term performance in environmental, social, governance and economic dimensions. The CEO's role in shaping the firms approach to sustainability is crucial, as their decisions directly impact the company's strategic direction. Psychological characteristics, such as optimism, myopic, Competitive motivation, and job security, are recognized as pivotal factors that can significantly influence corporate strategies and, consequently, sustainability outcomes. This study investigated the effect of CEO psychological characteristics on sustainability performance using data from 1,140 firms listed on the Tehran Stock Exchange between 2013 and 2014.
The results showed that optimistic, myopic and job security behaviors of the CEO do not have a significant effect on sustainable performance, while competitive motivation has a positive and significant effect. Based on the stakeholder theory, this research shows that the psychological characteristics of the CEO can affect the strategic and long-term decisions of firms and suggests that firms and investors should consider the psychological characteristics of managers in the selection and performance evaluation process. Also, these findings can help policymakers in designing appropriate legal frameworks and incentives to encourage firms to adopt sustainable and responsible practices. Finally, it contributes to a broader discourse on the role of leadership psychology in shaping sustainable corporate practices.