Discussion and conclusion
CEOs' two distinct incentives vary at different stages of their tenure. CEOs have a strong need to signal their ability early in their tenure and a lower signaling need later in their tenure. Similarly, CEOs have strong incentives to undertake more investment early in their tenure, as they can reap the benefits later in their tenure. In this study, we examine whether these two incentives arising from CEOs' tenure affect firms' CSR performance. Using a sample of U.S. firms for the 1999–2013 period, we find that firms' CSR performance is significantly higher in CEOs' early tenure than in their later tenure. We show that this trend is more significant in recent years, as the market has increasingly recognized the importance of CSR for value creation and thus has considered CSR to be a performance evaluation criterion. Further analyses show that the negative association between CEO tenure and CSR performance is more pronounced when CEOs have a longer expected tenure, supporting the career horizon hypothesis. Our results also reveal that CEOs' CSR performance early in their tenure is better in the presence of a more independent board, which is consistent with the signaling interpretation of the career concern hypothesis. Finally, we confirm that engagement in CSR early in their tenure could be an appropriate strategy for CEOs to mitigate career concerns, as we show a negative association between early tenure CSR performance and CEO dismissal probability.
