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Corporate social responsibility engagement, corporate financial performance and CEO characteristics

Author

Listed:
  • Chao Bian
  • Christopher Gan
  • Zhaohua Li
  • Baiding Hu

Abstract

The current study examines the effect of corporate social responsibility (CSR) engagement on corporate financial performance (CFP). Prior studies document a positive CSR-CFP association without considering the moderating effects of chief executive officer (CEO) characteristics such as compensation incentives and tenure. Our results show evidence of a positive association between CSR and CFP only in the firms managed by short-tenured, high-cash paid CEOs and particularly during an industry's cooling-off period. The results imply that the incentives embedded in the current CEO pay are not effective and CEOs use CSR as a compensation management tool to increase their share-based pay. To encourage a CEO to implement CSR engagement, particularly during an industry's boom period, the board of directors should decrease common-share payments and increase the CEO's option payments. In addition, the proportion of cash compensation in the CEO's total compensation should not be reduced.

Suggested Citation

  • Chao Bian & Christopher Gan & Zhaohua Li & Baiding Hu, 2016. "Corporate social responsibility engagement, corporate financial performance and CEO characteristics," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 11(3), pages 243-265.
    • Handle: RePEc:ids:ijbget:v:11:y:2016:i:3:p:243-265
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    Cited by:

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    7. Wafa Ghardallou & Noha Alessa, 2022. "Corporate Social Responsibility and Firm Performance in GCC Countries: A Panel Smooth Transition Regression Model," Sustainability, MDPI, vol. 14(13), pages 1-21, June.
    8. Tong Sheng & Bingquan Fang & Xiaoqian Lu & Xingheng Shi & Chaohai Shen & Xiaolan Zhou, 2022. "The Relationship between Corporate Social Responsibility, Global Investment, and Equity Incentives," Sustainability, MDPI, vol. 14(23), pages 1-27, December.
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    11. Juan Diego Alzate-G mez & Di genes Lagos Cort s & Percy Marquina Fieldman, 2020. "Corporate Social Responsibility Practices and Economic Performance in Colombia: The Moderating Effect of Family Control," International Journal of Economics and Financial Issues, Econjournals, vol. 10(1), pages 6-18.
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    13. Zhenghui Li & Yan Wang & Yong Tan & Zimei Huang, 2020. "Does Corporate Financialization Affect Corporate Environmental Responsibility? An Empirical Study of China," Sustainability, MDPI, vol. 12(9), pages 1-19, May.
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    15. Yingkai Tang & Aswad Akram & Lucian‐Ionel Cioca & Syed Ghulam Meran Shah & Muhammad Asim Ali Qureshi, 2021. "Whether an innovation act as a catalytic moderator between corporate social responsibility performance and stated owned and non‐state owned enterprises' performance or not? An evidence from Pakistani ," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(3), pages 1127-1141, May.
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