Corporate Governance and Executive Compensation for Corporate Social Responsibility

By Bryan Hong, Zhichuan Frank Li, Dylan B. Minor. Journal of Business Ethics, 2015

322 citations recorded by the source corpus.

We link the corporate governance literature in financial economics to the agency cost perspective of corporate social responsibility (CSR) to derive theoretical predictions about the relationship between corporate governance and the existence of executive compensation incentives for CSR. We test our predictions using novel executive compensation contract data, and find that firms with more shareholder-friendly corporate governance are more likely to provide compensation to executives linked to firm social performance outcomes. Also, providing executives with direct incentives for CSR is an effective tool to increase firm social performance. The findings provide evidence identifying corporate governance as a determinant of managerial incentives for social performance, and suggest that CSR activities are more likely to be beneficial to shareholders, as opposed to an agency cost.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/fa2836b5dd1d109f1c9306869f48a8040d5f44e0

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Strategy and Management

Citations in the corpus

Alignment Versus Monitoring: An Examination of the Effect of the CSR Committee and CSR-Linked Executive Compensation on CSR Performance (2021, background): “Under the alignment effect, CSR-linked executive compensation is expected to be positively associated with CSR performance (Hong et al., 2016; Li & Thibodeau, 2019).”
Corporate Social Responsibility Performance, Incentives, and Learning Effects (2020, background): “Empirical findings (Brammer and Millington 2008; Hong et al. 2016) show that, among other different factors, this relationship depends on the type of CSR performance analyzed [e.”
Corporate Social Responsibility and Financial Performance: The Moderating Role of Ownership Concentration in Turkey (2019, background): “In addition, the moderating role of other corporate governance characteristics, such as family ownership, CEO duality, board characteristics, or executive compensation [55,56], could constitute fruitful avenues for further research.”
Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms (2019, methodology): “The governance pillar was used to replace the economic pillar because the increment concern of the governance issue among corporate executives, investors, consumers and the general public led to widespread corporate sustainability initiatives [79].”
Greed or Good Deeds: An Examination of the Relation between Corporate Social Responsibility and the Financial Performance of U.S. Commercial Banks around the Financial Crisis (2016, unknown): “Using average director tenure as a proxy for the degree of board independence, Hong et al. (2015) find that average director tenure is negatively related to the existence of CSR incentives.22 Therefore, we use measures of board composition from RiskMetrics Directors database (percentage of…”
Corporate Social Responsibility and CEO Risk-Taking Incentives (2016, unknown): “The focus of studies exploring a negative CSR-CFP relation has been agency theory (e.g. Hong, Li, and Minor, 2016).”