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Board-level employee representation and corporate sustainability: A focus on executive compensation programs

Author

Listed:
  • Sandra Cavaco

    (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas)

  • Patricia Crifo

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - Groupe ENSAE-ENSAI - Groupe des Écoles Nationales d'Économie et Statistique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique)

  • Antoine Reberioux

    (LADYSS - Laboratoire Dynamiques Sociales et Recomposition des Espaces - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité)

Abstract

This paper explores the impact of board-level employee representation (BLER) on Corporate Social Responsibility (CSR) contracting, i.e. the integration of non-financial criteria into top executive officers' compensation. We exploit the enactment of two laws (in 2013 and 2015) that mandated the presence of employee directors in large French companies to identify a causal impact in a staggered difference-in-differences design. Our findings show that BLER significantly increases the likelihood of implementing CSR contracting, especially when employee directors are members of the compensation committee (a unique feature of the French system). In addition, using an instrumental variables (IV) approach, we show that CSR contracting has a significant, positive impact on CSR performance. This study opens up avenues for future research to delve deeper into the role of employee representation in corporate governance and CSR.

Suggested Citation

  • Sandra Cavaco & Patricia Crifo & Antoine Reberioux, 2025. "Board-level employee representation and corporate sustainability: A focus on executive compensation programs," Working Papers hal-05273679, HAL.
    • Handle: RePEc:hal:wpaper:hal-05273679
    Note: View the original document on HAL open archive server: https://hal.science/hal-05273679v1
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