Corporate social responsibility and CEO compensation: the moderating effect of corporate governance (original) (raw)
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Pacific Accounting Review
Purpose The purpose of this study is to examine the direct association between firms’ corporate social responsibility (CSR) scores, CSR disclosures and executive compensation. This study further investigates the moderating role of CSR in the association between executive compensation and firms’ stock market and accounting performances. Design/methodology/approach This study collects CEO compensation information from the Execucomp database and CSR performance information from the MSCI ESG database. The final sample consists of 4,193 firm-year observations for 1,318 US public firms for the period 2009–2013. This study uses lagged regression analysis to test the direct and moderating roles of CSR in executive compensation. Findings Regarding the direct role of CSR, this study finds that CEO compensation is positively related to CSR performance but not to firms’ issuance of CSR reports. This study also finds a positive moderating role of CSR in the relationship between CEO compensation ...
Executive Compensation and Corporate Social Responsibility: Evidence from Chinese-listed SOEs
SSRN Electronic Journal, 2020
Purpose-This study examines the efficacy of compensation in encouraging corporate executives to promote corporate social responsibility (CSR). In particular, it closely examines the effect of a golden parachute (GP) on an executive's behavior toward CSR. Design/methodology/approach-This study uses longitudinal data on 1,301 US firms for the period from 1993 to 2013. The data comes from Compustat, MSCI ESG STATS, RiskMetrics and ExecuComp. Findings-We find an inverse association between current and long-term compensations and GP on firms' CSR. However, a test on the moderating effect discloses that a GP and long-term compensation jointly and positively increase the firms' CSR performance. This increase supports the idea that executives with a GP seek to maximize their long-term wealth by approving CSR projects that add value. The results also show that female executives are more likely to promote CSR than their male counterparts, and older executives are less willing to engage in CSR projects. Practical implications-Adding a GP contractual clause to the executive compensation package could encourage greater engagement in CSR projects. The CEO with a GP will ensure that the firm engages in only value-enhancing CSR projects; this should align the interest of the society (greater firm engagement in CSR) with the interest of the firm (value maximization). Originality/value-This study contributes to the literature by examining the moderating effect of a GP on the association between CSR and executive compensation.
Social Responsibility Journal, 2019
PurposeThis paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social responsibility (CSR) and vice versa.Design/methodology/approachBased on upper echelons theory, the author conducts a structured literature review and evaluates 84 empirical-quantitative studies on CEO and CSR variables.FindingsWhile the majority of the included studies analyzed the CEO-CSR link, there are indicators for a bidirectional relationship. Moreover, prior research has focused on CEO incentives, especially compensation contracts, and on the US capital market. A major research gap relates to CEO characteristics, e.g. CEO values, education and experience.Research limitations/implicationsHeterogeneous CEO and CSR variables and endogeneity concerns lower the validity of recent studies. Future research is encouraged to implement dynamic regression models, increase CSR and CEO proxies and focus on international sample...
Sustainability, 2021
The aim of this research was to provide further evidence of the impact of the power of the Chief Executive Officer (CEO) on corporate social responsibility (CSR) disclosure. Additionally, we explore the moderating role of CEO compensation linked to shareholder return on the association between CEO power and CSR disclosure. The theories used follow agency theory and stakeholder theory and the sample comprised 9182 international firm-year observations collected from the Thomson Reuters database from 2009 to 2018. Our model was estimated using the generalized method of moments (GMM) estimator. The results found that CEO power was positively associated with CSR disclosure, contrary to our expectations. Additionally, our evidence also shows that CEO compensation linked to shareholder return plays a positive moderating role on the relationship between CEO power and CSR reporting.
Is Corporate Social Responsibility an Agency Problem? Evidence from CEO Turnovers
SSRN Electronic Journal, 2014
We examine whether firms' Corporate Social Responsibility (CSR) activity is due to managers acting at the expense of their owners or in-line with owner preferences. The former implies that CSR activity is more prevalent among firms with entrenched managers, whereas the latter suggests that CSR activity is higher in firms with more vigilant owners. Consistent with the shareholder-driven view, our empirical results show that CEO turnover-financial performance sensitivity increases in firm CSR scores, measured contemporaneously as well as prior to CEO appointment. Further, CSR ratings remain unchanged following CEO turnover and are associated with measures of superior owner oversight.
Corporate Social Responsibility Performance, Incentives, and Learning Effects
Journal of Business Ethics
This paper examines the effectiveness of the use of executive compensation linked to Corporate Social Responsibility (CSR) goals across US firms. Empirical analysis of a cross-industry sample of 746 listed companies for the period 2002-2013 showed that the use of CSR-linked compensation contracts for Named Executive Officers (NEOs) promotes CSR performance. More specifically, we found that linking NEOs' compensation to CSR goals produces positive effects in the 3rd year after adoption. As firms accumulate experience and learn how to use the system over the following eight periods, CSR performance increases monotonically. Furthermore, experience accumulated over time affects the different specifications of CSR performance asymmetrically, by reducing both environmental and social CSR concerns and increasing only environmental CSR strengths. Interestingly, we also found that the simultaneous use of other CSR-focused governance systems moderates the effect of a firm's accumulated experience in using CSR-linked executive compensation on CSR performance: the existence of a CSR committee at the board level and the public release of a CSR report are likely to have a positive moderating effect, while the purchase of a CSR audit has no moderating effect.
CEO Incentives and Corporate Social Performance
2003
This paper examines the relationship between CEO incentives and strong and weak corporate social performance. Using the KLD database we find that incentives have no significant relationship with strong social performance. Salary and longterm incentives have a positive association with weak social performance.
CEO Ability and Corporate Social Responsibility
Journal of Business Ethics, 2017
This study examines the impact of chief executive officer (CEO) ability on firms' corporate social responsibility (CSR) performance. We find that firms' CSR performance increases with CEO ability. Specifically, firms with more able CEOs are associated with more socially responsible activities and fewer socially irresponsible activities, and are associated with more stakeholder CSR rather than third-party CSR. We further find that the positive relation between CEO ability and CSR is weakened for CEO who is also the chair of the board and for CEO who is close to retirement; and is weakened when the CSR emphasis exerted by a firm's external environment is high. Our results are robust after controlling for firm fixed effects and to the use of multiple measures of CSR performance and CEO ability. Overall, our evidence is consistent with our conjecture that more able CEOs have less career concerns so that these CEOs are more willing to undertake long-term investments in socially beneficial activities, leading to better CSR performance. Keywords CEO ability Á Career concerns Á Corporate social responsibility Á Long-term investment Á CSR emphasis
2022
Company performance is a measure of management's success in running the company. This study aims to empirically examine the effect of Corporate Social Responsibility and management compensation on company performance with independent commissioners as moderating variables. This study uses quantitative methods with multiple regression analysis techniques. The population in this study was all banking companies listed on the Indonesia Stock Exchange in 2018-2020 with a total sample of 78 companies. The results of the tests that have been carried out show that Corporate Social Responsibility has a negative effect on company performance. Management compensation has an effect on company performance. Furthermore, Corporate Social Responsibility has an effect on company performance with independent commissioners as a moderating variable. Finally, management compensation has an effect on company performance with independent commissioners as a moderating variable.