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Prosocial CEOs, corporate policies, and firm value

Author

Listed:
  • Mei Feng

    (University of Pittsburgh)

  • Weili Ge

    (University of Washington)

  • Zhejia Ling

    (California State University, Fullerton)

  • Wei Ting Loh

    (Singapore Management University)

Abstract

This paper examines how chief executive officers’ (CEOs’) prosocial tendency influences corporate policies and firm value. We use individuals’ involvement with charitable organizations as a proxy for prosocial tendency. We find that, compared to firms with non-prosocial CEOs, firms with prosocial CEOs have lower executive subordinate turnover, implement more employee-friendly policies, experience higher customer satisfaction, and engage in more socially responsible activities. We also find that firms with prosocial CEOs have higher value and lower risk, partly due to the corporate policies adopted by prosocial CEOs. These results are corroborated when we compare changes in corporate policies and firm value around different types of CEO turnovers: a prosocial CEO replacing a non-prosocial CEO versus other types. Our results thus suggest that prosocial CEOs are more likely to make corporate decisions that benefit others and increase firm value.

Suggested Citation

  • Mei Feng & Weili Ge & Zhejia Ling & Wei Ting Loh, 2024. "Prosocial CEOs, corporate policies, and firm value," Review of Accounting Studies, Springer, vol. 29(2), pages 1854-1903, June.
    • Handle: RePEc:spr:reaccs:v:29:y:2024:i:2:d:10.1007_s11142-023-09761-0
    DOI: 10.1007/s11142-023-09761-0
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    More about this item

    Keywords

    Prosocial tendency; Corporate policies; Employee turnover; Customer satisfaction; Corporate social responsibility; Firm value;
    All these keywords.

    JEL classification:

    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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