دانلود رایگان مقاله انگلیسی مسئولیت اجتماعی شرکتی و ساختار پاداش های مدیر عامل اجرایی - الزویر 2018

ABSTRACT

We examine how firms' corporate social responsibility (CSR) performance affects CEO compensation structure. Traditional agency theory suggests that CEOs engage in CSR for their own interests at the expense of shareholders. A competing argument is that CEOs consider firms' social performance as a business strategy to increase firm value and align their interests with those of shareholders. Our results support the latter prediction. We find that a firm's social performance is negatively associated with the proportion of cash-based compensation, while it is positively associated with the proportion of equity-based compensation. These results are robust to the degree of corporate governance, and they are more pronounced for firms with high levels of inside director ownership and long director tenure. Overall, our findings highlight the positive impact of CSR performance on CEO compensation packages, implying that CEOs' fiduciary behavior of engaging in CSR leads to mitigating agency problems and maximizing firm value.

Summary and conclusion

We investigate how a firm's CSR activity is associated with the structure of CEO compensation. We find that socially responsible firms tend to have a relatively high proportion of equity-based compensation and a relatively low proportion of cash-based compensation. These results support that CEOs engage in CSR as a business activity to improve their relationships with other stakeholders and maximize firm value. At the same time, this evidence refutes CEOs' rent-seeking behavior through overinvestment in CSR. We also find that the positive (negative) association between CSR and the proportion of equity-based (cash-based) compensation is robust to the degree of corporate governance and more pronounced in firms with weak corporate governance, such as higher levels of inside director ownership, longer director tenure, and a lower proportion of independent board members. In addition, a firm's high CSR performance reinforces the positive impact of the proportion of equity-based compensation on firm value. These results confirm CEOs' intention of engaging in CSR as a business activity that improves firm value. The results are also more pronounced in certain CSR categories. The negative association between CSR performance and the proportion of cash-based compensation is more pronounced in environment, while the positive association between CSR performance and the proportion of equity-based compensation is more pronounced in environment and employee relations. Our analysis on regulatory changes shows that the results are mainly driven by the post-SOX and post-SFAS periods. Overall, the results suggest that firms' social performance is associated with a more efficient CEO compensation structure that induces CEOs to maximize firm values in the long run. Given the fact that CEOs formulate and implement firms' CSR policies, our results offer important insights into how and to what extent they determine firms' engagement in CSR activities. Furthermore, our findings provide further implications on how a firm's CSR performance is associated with the profiles of CEOs and how CEOs perceive their role in firms' CSR activities.