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Does CEO–Audit Committee/Board Interlocking Matter for Corporate Social Responsibility?

Author

Listed:
  • Sudipta Bose

    (The University of Newcastle)

  • Muhammad Jahangir Ali

    (La Trobe University)

  • Sarowar Hossain

    (UNSW Sydney)

  • Abul Shamsuddin

    (The University of Newcastle)

Abstract

This study examines the impact of the Chief Executive Officer (CEO)’s interlocking, created through serving on other companies’ audit committees and/or boards, on corporate social responsibility (CSR) performance of the focal company (interlocked CEO’s company) and that of its linked companies. We find that CEO interlocking positively affects CSR performance of both the focal company and its linked companies. Further analysis shows that interlocks created by the CEO enhance CSR performance and in turn the financial performance of both the focal company and its linked companies. Our findings are robust to a battery of analyses, including Heckman’s (1979) selection bias correction, propensity score matching (PSM), alternative measures of CSR performance, and CEO interlocks. These findings are important to regulators, company management teams, and other stakeholders with an interest in how the social ties of CEOs influence companies’ CSR performance and in the CSR–financial performance nexus.

Suggested Citation

  • Sudipta Bose & Muhammad Jahangir Ali & Sarowar Hossain & Abul Shamsuddin, 2022. "Does CEO–Audit Committee/Board Interlocking Matter for Corporate Social Responsibility?," Journal of Business Ethics, Springer, vol. 179(3), pages 819-847, September.
    • Handle: RePEc:kap:jbuset:v:179:y:2022:i:3:d:10.1007_s10551-021-04871-8
    DOI: 10.1007/s10551-021-04871-8
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    1. Wang, Yujie & Tsang, Albert & Xiang, Yi & Yao, Daifei (Troy), 2023. "Corporate social responsibility misconduct and formation of board interlocks," Journal of Financial Stability, Elsevier, vol. 67(C).

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