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Lin Peng

Krell Chair Professor in Finance
Recognition Year(s): 2024
Area of Impact: CSR or Sustainability
School: Zicklin School of Business, City University of New York, Baruch College
Location: United States

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Summary

Lin Peng is the Krell Chair Professor of Finance at the Zicklin School of Business at Baruch College, the City University of New York. Her research tackles two pressing global challenges: (1) it seeks to establish effective policy frameworks and incentives for businesses to address their environmental and societal impact and mitigate climate change risks; (2) Peng also explores online social media and social networks in terms of harnessing their power to facilitate accessible financing while mitigating their roles in spreading misinformation. She hopes to use rigorous economic analysis to inform business and policymakers’ decisions in facilitating long-term sustainability.

Description of Research Impact

Businesses significantly affect the environment through their operations, resource consumption, waste generation, and greenhouse gas emissions. Organizations that embrace corporate sustainability can help mitigate climate change and preserve natural resources for the future. Linking pay with environmental, social, and governance (ESG) practices, such as by using carbon dioxide targets and employee satisfaction in executive contracts, incentivizes executives to prioritize sustainability. About 45 percent of the top U.S. firms already implement such pay for CEOs. However, debates remain over its effectiveness, vulnerability to manipulation, and impact on financial performance.

Peng’s research provides important insights for investors and regulators. Examining major firms globally, her work enhances understanding of how the adoption of ESG-linked pay is shaped by a country’s culture, legal and institutional environment, industry factors, and firm characteristics. Peng’s research offers valuable guidance for company boards in designing incentive schemes for CEOs. For example, a pay contract that helps direct managerial attention toward dimensions that are often overlooked yet valuable in the long term can be advantageous for both shareholders and stakeholders.

As firms anxiously await a major announcement by the U.S. Securities and Exchange Commission on climate-related disclosure requirements (expected in 2024), Peng’s research offers crucial insights that help firms understand the impacts of climate disclosure regulation and also help them formulate optimal corporate governance strategies. Her research was initiated with a grant from the United Nations’ Principles for Responsible Investment (PRI) and was featured in a U.N. PRI newsletter.

Peng’s other research focuses on the role of online social media and social networks in influencing financial markets. Using novel data from large-scale, representative, real-world social network platforms, Peng applies big data, artificial intelligence, and machine learning techniques to analyze the effects of social media in various settings. Her research shows that online social networks play beneficial roles in helping firms and individuals obtain more accessible financing, especially in the aftermath of major natural disasters. On the other hand, social media can also facilitate the transmission of noise and result in investor losses. Peng’s research has important implications for the regulation and design of social media platforms and policy interventions for investor and consumer protection.

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