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The moderating role of ESG disclosure scores in determining the impact of firm performance on CEO pay: a dynamic panel approach

Author

Listed:
  • Chetna Rath
  • Malabika Deo

Abstract

This paper aims to empirically examine the moderating role of ESG disclosure while determining performance-based CEO pay. The compensation pay given to the CEOs must be linked to corporate sustainability so as to motivate them to act towards non-economic goals vis-à-vis earning profits. A total of 67 companies listed in the NSE Nifty 100 ESG index spanning six years from 2014 to 2019 have been taken as the panel data sample. As a baseline methodology, the PCSE model is applied and further two-step system GMM model has been considered for robustness check. The findings reveal that ESG disclosure scores show a significant positive effect in moderating the CEO pay-performance relationship. Stand-alone ESG measures indicate that except for social disclosure scores, all the other indicators depict a significant impact in determining the effect of firm performance on CEO pay. This study implies consideration of non-financial performance measures while determining CEO Pay.

Suggested Citation

  • Chetna Rath & Malabika Deo, 2023. "The moderating role of ESG disclosure scores in determining the impact of firm performance on CEO pay: a dynamic panel approach," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 13(3), pages 243-259.
    • Handle: RePEc:ids:ijcgov:v:13:y:2023:i:3:p:243-259
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