Do Sustainability Compensation Incentives Matter for the Social Reputation of Global Hospitality Firms? A Machine Learning Approach

Our study aims to investigate the potential impact of sustainability compensation incentives on the social reputation of hospitality firms, using empirical data from prominent companies in the hospitality sector under the umbrella of legitimacy theory. The data for this study were sourced from Refinitiv, focusing on publicly traded companies within the hospitality and tourism industry. The initial sample consisted of 1100 firm‐year observations from 2019, 2020, and 2021. The analysis is based on an empirical modelling approach that examines the association between sustainability‐linked executive compensation and firms' social reputation outcomes using firm‐level data. The findings suggest that the effect of sustainability compensation incentives on corporate responsibility outcomes is negative but not statistically significant. This result indicates that while there are potential negative effects, the findings are not strong enough to conclude that sustainability‐linked compensation impacts the likelihood of receiving corporate responsibility awards. From a policy perspective, the findings suggest that linking executive compensation to sustainability objectives may not, on its own, be sufficient to generate reputational benefits, pointing to the need for broader governance and implementation considerations.