Corporate social responsibility performance, incentives, and learning effects

Derchi, Giovanni-Battista (Ecole hôtelière de Lausanne, HES-SO // University of Applied Sciences Western Switzerland) ; Zoni, Laura (Università Cattolica del Sacro Cuore, Piacenza, Italy) ; Dossi, Andrea (Università Bocconi / SDA Bocconi School of Management, Milano, Italy)

This paper examines the effectiveness of the use of executive compensation linked to Corporate Social Responsibility (CSR) goals across US firms. Empirical analysis of a cross-industry sample of 746 listed companies for the period 2002–2013 showed that the use of CSR-linked compensation contracts for Named Executive Officers (NEOs) promotes CSR performance. More specifically, we found that linking NEOs’ compensation to CSR goals produces positive effects in the 3rd year after adoption. As firms accumulate experience and learn how to use the system over the following eight periods, CSR performance increases monotonically. Furthermore, experience accumulated over time affects the different specifications of CSR performance asymmetrically, by reducing both environmental and social CSR concerns and increasing only environmental CSR strengths. Interestingly, we also found that the simultaneous use of other CSR-focused governance systems moderates the effect of a firm’s accumulated experience in using CSR-linked executive compensation on CSR performance: the existence of a CSR committee at the board level and the public release of a CSR report are likely to have a positive moderating effect, while the purchase of a CSR audit has no moderating effect.


Keywords:
Article Type:
scientifique
Faculty:
Economie et Services
School:
EHL
Institute:
Aucun institut
Subject(s):
Economie/gestion
Date:
2020-06
Pagination:
25 p.
Published in:
Journal of business ethics
Numeration (vol. no.):
To be published
DOI:
ISSN:
0167-4544
Appears in Collection:



 Record created 2021-03-29, last modified 2021-04-06

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