David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
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Journal of Business Ethics 104 (2):159-173 (2011)
We empirically examine the impact of corporate social responsibility (CSR) on CEO compensation using a large sample of the US firms from 1996 to 2010. We develop and test two hypotheses, the overinvestment hypothesis based on agency theory and the conflict–resolution hypothesis based on stakeholder theory. We find that the lag of CSR adversely affects both total compensation and cash compensation, after controlling for various firm and board characteristics. Our estimates show that an interquartile increase in CSR is followed by a 4.35% (2.78%) decrease in total (cash) compensation. We also find an inverse association between lagged employee relations and CEO compensation. Our results are robust to the correction for endogeneity using instrumental variable approach. Taken together, our results support the conflict–resolution hypothesis, but not the CSR overinvestment argument.
|Keywords||Corporate social responsibility Executive compensation Conflict resolution|
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References found in this work BETA
Amir Barnea & Amir Rubin (2010). Corporate Social Responsibility as a Conflict Between Shareholders. Journal of Business Ethics 97 (1):71 - 86.
Archie B. Carroll (2003). Corporate Social Responsibility. Business Ethics Quarterly 13 (4):503-530.
Maretno A. Harjoto & Hoje Jo (2011). Corporate Governance and CSR Nexus. Journal of Business Ethics 100 (1):45 - 67.
Ronald Paul Hill, Thomas Ainscough, Todd Shank & Daryl Manullang (2007). Corporate Social Responsibility and Socially Responsible Investing: A Global Perspective. [REVIEW] Journal of Business Ethics 70 (2):165 - 174.
Michael C. Jensen (2002). Value Maximization, Stakeholder Theory, and the Corporate Objective Function. Business Ethics Quarterly 12 (2):235-256.
Citations of this work BETA
Maretno A. Harjoto & Hoje Jo (forthcoming). Legal Vs. Normative CSR: Differential Impact on Analyst Dispersion, Stock Return Volatility, Cost of Capital, and Firm Value. Journal of Business Ethics.
Mahfuja Malik (forthcoming). Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature. Journal of Business Ethics.
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