Corporate Social Responsibility and Managerial Entrenchment
AbstractWhen stakeholder protection is left to the voluntary initiative of managers, relations with social activists may become an effective entrenchment strategy for inefficient CEOs. We thus argue that managerial turnover and firm value are increased when explicit stakeholder protection is introduced so as to deprive incumbent CEOs of activists’ support. This finding provides a rationale for the emergence of specialized institutions (social auditors and ethic indexes) that help firms commit to stakeholder protection even in case of managerial replacement. Our theory also explains a recent trend whereby social activist organizations and institutional shareholders are showing a growing support for each others’ agenda
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Bibliographic InfoPaper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 173.
Date of creation: 01 Jan 2007
Date of revision:
Publication status: Published in Journal of Economics and Management Strategy, 2007, 16 (3), pages 741-771
Corporate Governance; Corporate Social Responsibility; Managerial Entrenchment; Social Activism; Stakeholders;
Other versions of this item:
- Cespa, Giovanni & Cestone, Giacinta, 2004. "Corporate Social Responsibility and Managerial Entrenchment," CEPR Discussion Papers 4648, C.E.P.R. Discussion Papers.
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-02-03 (All new papers)
- NEP-BEC-2007-02-03 (Business Economics)
- NEP-CFN-2007-02-03 (Corporate Finance)
- NEP-FMK-2007-02-03 (Financial Markets)
- NEP-SOC-2007-02-03 (Social Norms & Social Capital)
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