nach oben

Journal of Management and Governance

Erschienen in:

16.08.2019

The impact of two types of CEO overcompensation on corporate social responsibility

verfasst von: Nara Jeong

Erschienen in: Journal of Management and Governance | Ausgabe 3/2020

Einloggen

Aktivieren Sie unsere intelligente Suche, um passende Fachinhalte oder Patente zu finden.

search-config

KI-gestützte Suche

Aus

Abstract

This article explores the impact of two types of CEO overcompensation—internal and external overcompensation—on the socially responsible activities of firms. Using a panel dataset of U.S. firms, this study tests its hypotheses and finds that CEO internal overcompensation discourages corporate social responsibility (CSR), due to strong CEO internal dominance and power in achieving CEO’s short-term career goals. By contrast, CEO external overcompensation promotes CSR performance because of CEOs interests in maintaining status and reputation in the industry. Moreover, when firm financial performance is good, the relation between internal overcompensation and CSR performance becomes positive, while older CEO and high industry-level CSR performance strengthens the relation between external overcompensation and CSR performance. In sum, contradicting CSR performance levels, resulting from different types of CEO overcompensation, are supported by our analyses. Theoretical and practical implications will be discussed.

Vorheriger Artikel Female management, overconfidence and debt maturity: European evidence

Nächster Artikel The effect of large controlling shareholders on equity prices in France: monitoring or entrenchment?

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Jetzt informieren

Nur mit Berechtigung zugänglich

Agle, B. R., Mitchell, R. K., & Sonnenfeld, J. A. (1999). Who matters to CEOs? An investigation of stakeholder attributes and salience, corporate performance, and CEO values. Academy of Management Journal, 42(5), 507–525.

Bebchuk, L., & Fried, J. (2004). Pay without performance (Vol. 29). Cambridge, MA: Harvard University Press.

Boyd, B. K. (1995). CEO duality and firm performance: A contingency model. Strategic Management Journal, 16(4), 301–312.CrossRef

Carpenter, M. A., Geletkanycz, M. A., & Sanders, W. G. (2004). Upper Echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30(6), 749–778. https://doi.org/10.1016/j.jm.2004.06.001.CrossRef

Carpenter, M. A., & Sanders, W. M. G. (2002). Top management team compensation: the missing link between CEO pay and firm performance? Strategic Management Journal, 23(4), 367–375. https://doi.org/10.1002/smj.228.CrossRef

Chatterjee, A., & Hambrick, D. C. (2007). It’s all about me: Narcissistic chief executive officers and their effects on company strategy and performance. Administrative Science Quarterly, 52(3), 351–386.CrossRef

Chatterji, A. K., Levine, D. I., & Toffel, M. W. (2009). How well do social ratings actually measure corporate social responsibility? Journal of Economics & Management Strategy, 18(1), 125–169. https://doi.org/10.1111/j.1530-9134.2009.00210.x.CrossRef

Chin, M. K., Hambrick, D. C., & Treviño, L. K. (2013). Political ideologies of CEOs: The influence of executives’ values on corporate social responsibility. Administrative Science Quarterly, 58(2), 197–232. https://doi.org/10.1177/0001839213486984.CrossRef

Choi, J., & Wang, H. (2009). Stakeholder relations and the persistence of corporate financial performance. Strategic Management Journal, 30(8), 895–907.CrossRef

Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. NJ: Englewood Cliffs.

Deckop, J. R. (1988). Determinants of chief executive officer compensation. ILR Review, 41(2), 215–226. https://doi.org/10.1177/001979398804100204.CrossRef

Deckop, J. R., Merriman, K. K., & Gupta, S. (2006). The effects of CEO pay structure on corporate social performance. Journal of Management, 32(3), 329–342.CrossRef

Dimaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.CrossRef

Ezzamel, M., & Watson, R. (1998). Market comparison earnings and the bidding-up of executive cash compensation: evidence from The United Kingdom. Academy of Management Journal, 41(2), 221–231. https://doi.org/10.5465/257104.CrossRef

Festinger, L. (1954). A theory of social comparison processes. Human Relations, 7(2), 117–140.CrossRef

Finkelstein, S. (1992). Power in top management teams: dimensions, measurement, and validation. Academy of Management Journal, 35(3), 505–538. https://doi.org/10.5465/256485.CrossRef

Finkelstein, S., & Boyd, B. K. (1998). How much does the CEO matter? The role of managerial discretion in the setting of CEO compensation. Academy of Management Journal, 41(2), 179–199. https://doi.org/10.5465/257101.CrossRef

Finkelstein, S., Hambrick, D. C., & Cannella, A. A. (2009). Strategic leadership: Theory and research on executives, top management teams, and boards. Oxford: University Press.

Fombrun, C. J., Gardberg, N. A., & Barnett, M. L. (2000). Opportunity platforms and safety nets: Corporate citizenship and reputational risk. Business and Society Review, 105(1), 85–106. https://doi.org/10.1111/0045-3609.00066.CrossRef

Fong, E. A. (2010). CEO pay fairness as a predictor of stakeholder management. Journal of Business Research, 63(4), 404–410. https://doi.org/10.1016/j.jbusres.2009.04.017.CrossRef

Fong, E. A., Xing, X., Orman, W. H., & Mackenzie, W. I. (2015). Consequences of deviating from predicted CEO labor market compensation on long-term firm value. Journal of Business Research, 68(2), 299–305. https://doi.org/10.1016/j.jbusres.2014.07.004.CrossRef

Francoeur, C., Melis, A., Gaia, S., & Aresu, S. (2017). Green or Greed? An alternative look at CEO compensation and corporate environmental commitment. Journal of Business Ethics, 140(3), 439–453. https://doi.org/10.1007/s10551-015-2674-5.CrossRef

Fredrickson, J. W., Davis-Blake, A., & Sanders, W. M. G. (2010). Sharing the wealth: Social comparisons and pay dispersion in the CEO’S top team. Strategic Management Journal, 31(10), 1031–1053.CrossRef

Greening, D. W., & Turban, D. B. (2000). Corporate social performance as a competitive advantage in attracting a quality workforce. Business & Society, 39(3), 254–280. https://doi.org/10.1177/000765030003900302.CrossRef

Haleblian, J., & Finkelstein, S. (1993). Top management team size, CEO dominance, and firm performance: The moderating roles of environmental turbulence and discretion. Academy of Management Journal, 36(4), 844–863. https://doi.org/10.5465/256761.CrossRef

Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.CrossRef

Harris, J., & Bromiley, P. (2007). Incentives to cheat: The influence of executive compensation and firm performance on financial misrepresentation. Organization Science, 18(3), 350–367.CrossRef

Hayward, M. L., & Hambrick, D. C. (1997). Explaining the premiums paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly, 103–127.

Henderson, A. D., & Fredrickson, J. W. (1996). Information-processing demands as a determinant of Ceo compensation. Academy of Management Journal, 39(3), 575–606. https://doi.org/10.5465/256656.CrossRef

Henderson, A. D., Miller, D., & Hambrick, D. C. (2006). How quickly do CEOs become obsolete? Industry dynamism, CEO tenure, and company performance. Strategic Management Journal, 27(5), 447–460. https://doi.org/10.1002/smj.524.CrossRef

Ioannou, I., & Serafeim, G. (2019). Corporate sustainability: A strategy? SSRN Electronic Journal.. https://doi.org/10.2139/ssrn.3312191.CrossRef

Kacperczyk, A. (2009). With greater power comes greater responsibility? Takeover protection and corporate attention to stakeholders. Strategic Management Journal, 30(3), 261–285.CrossRef

Kahneman, D., & Tversky, A. (2012). Prospect theory: An analysis of decision under risk. In: World Scientific Handbook in financial economics series: Vol. Volume 4. Handbook of the fundamentals of financial decision making (pp. 99–127). https://doi.org/10.1142/9789814417358_0006.

Kang, J. (2013). The relationship between corporate diversification and corporate social performance. Strategic Management Journal, 34(1), 94–109. https://doi.org/10.1002/smj.2005.CrossRef

Kang, J. (2016). Labor market evaluation versus legacy conservation: What factors determine retiring CEOs’ decisions about long-term investment? Strategic Management Journal, 37(2), 389–405. https://doi.org/10.1002/smj.2234.CrossRef

Kramer, M. R., & Porter, M. E. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.

Larraza-Kintana, M., Wiseman, R. M., Gomez-Mejia, L. R., & Welbourne, T. M. (2007). Disentangling compensation and employment risks using the behavioral agency model. Strategic Management Journal, 28(10), 1001–1019. https://doi.org/10.1002/smj.624.CrossRef

Lawrence, B. S. (1997). Perspective—The black box of organizational demography. Organization Science, 8(1), 1–22. https://doi.org/10.1287/orsc.8.1.1.CrossRef

Lev, B., Petrovits, C., & Radhakrishnan, S. (2010). Is doing good good for you? How corporate charitable contributions enhance revenue growth. Strategic Management Journal, 31(2), 182–200.

Liang, K.-Y., & Zeger, S. L. (1986). Longitudinal data analysis using generalized linear models. Biometrika, 73(1), 13–22. https://doi.org/10.1093/biomet/73.1.13.CrossRef

Main, B. G. M., O’reilly, C. A., & Wade, J. (1995). The CEO, the board of directors and executive compensation: Economic and psychological perspectives. Industrial and Corporate Change, 4(2), 293–332. https://doi.org/10.1093/icc/4.2.293.CrossRef

Margolis, J. D., & Walsh, J. P. (2003). Misery loves companies: rethinking social initiatives by business. Administrative Science Quarterly, 48(2), 268–305. https://doi.org/10.2307/3556659.CrossRef

Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–396. https://doi.org/10.1037/h0054346.CrossRef

Matta, E., & Beamish, P. W. (2008). The accentuated CEO career horizon problem: Evidence from international acquisitions. Strategic Management Journal, 29(7), 683–700.CrossRef

Mattingly, J. E., & Berman, S. L. (2006). Measurement of corporate social action: Discovering taxonomy in the kinder Lydenburg domini ratings data. Business & Society, 45(1), 20–46. https://doi.org/10.1177/0007650305281939.CrossRef

McDonnell, M.-H., & King, B. (2013). Keeping up appearances: Reputational threat and impression management after social movement boycotts. Administrative Science Quarterly, 58(3), 387–419.CrossRef

Miller, J. S., Wiseman, R. M., & Gomez-Mejia, L. R. (2002). The fit between CEO compensation design and firm risk. Academy of Management Journal, 45(4), 745–756. https://doi.org/10.5465/3069308.CrossRef

Muller, A., & Kräussl, R. (2011). Doing good deeds in times of need: a strategic perspective on corporate disaster donations. Strategic Management Journal, 32(9), 911–929. https://doi.org/10.1002/smj.917.CrossRef

Murphy, K. J., & Zábojník, J. (2004). CEO pay and appointments: A market-based explanation for recent trends. American Economic Review, 94(2), 192–196. https://doi.org/10.1257/0002828041302262.CrossRef

Oh, W.-Y., Chang, Y. K., & Cheng, Z. (2016). When CEO career horizon problems matter for corporate social responsibility: The moderating roles of industry-level discretion and blockholder ownership. Journal of Business Ethics, 133(2), 279–291.CrossRef

Peng, M. W., Zhang, S., & Li, X. (2007). CEO duality and firm performance during China’s institutional transitions. Management and Organization Review, 3(2), 205–225. https://doi.org/10.1111/j.1740-8784.2007.00069.x.CrossRef

Schulz, A.-C., & Flickinger, M. (2018). Does CEO (over)compensation influence corporate reputation? Review of Managerial Science.. https://doi.org/10.1007/s11846-018-0305-0.CrossRef

Song, W.-L., & Wan, K.-M. (2019). Does CEO compensation reflect managerial ability or managerial power? Evidence from the compensation of powerful CEOs. Journal of Corporate Finance, 56, 1–14. https://doi.org/10.1016/j.jcorpfin.2018.11.009.CrossRef

Tang, J., Crossan, M., & Rowe, W. G. (2011). Dominant CEO, deviant strategy, and extreme performance: The moderating role of a powerful board. Journal of Management Studies, 48(7), 1479–1503. https://doi.org/10.1111/j.1467-6486.2010.00985.x.CrossRef

Tang, Y., Qian, C., Chen, G., & Shen, R. (2015). How CEO hubris affects corporate social (ir) responsibility. Strategic Management Journal, 36(9), 1338–1357.CrossRef

Tang, Y., Zhang, F., & Chen, G. (2017). Fighting for justice: How underpaid CEOs respond to CSR. Academy of Management Proceedings, 2017(1), 13409. https://doi.org/10.5465/AMBPP.2017.13409abstract.CrossRef

Vergne, J., Wernicke, G., & Brenner, S. (2018). Signal incongruence and its consequences: A study of media disapproval and CEO overcompensation. Organization Science, 29(5), 796–817. https://doi.org/10.1287/orsc.2018.1209.CrossRef

Wang, H., & Qian, C. (2011). Corporate philanthropy and corporate financial performance: The roles of stakeholder response and political access. Academy of Management Journal, 54(6), 1159–1181. https://doi.org/10.5465/amj.2009.0548.CrossRef

Wong, E. M., Ormiston, M. E., & Tetlock, P. E. (2011). The effects of top management team integrative complexity and decentralized decision making on corporate social performance. Academy of Management Journal, 54(6), 1207–1228. https://doi.org/10.5465/amj.2008.0762.CrossRef

Wowak, A. J., Hambrick, D. C., & Henderson, A. D. (2011). Do CEOS encounter within-tenure settling up? A multiperiod perspective on executive pay and dismissal. Academy of Management Journal, 54(4), 719–739. https://doi.org/10.5465/amj.2011.64869961.CrossRef

Titel: The impact of two types of CEO overcompensation on corporate social responsibility
verfasst von: Nara Jeong
Publikationsdatum: 16.08.2019
Verlag: Springer US
Erschienen in: Journal of Management and Governance / Ausgabe 3/2020
Print ISSN: 1385-3457
Elektronische ISSN: 1572-963X
DOI: https://doi.org/10.1007/s10997-019-09482-0

Springer Professional

Abstract

Bitte loggen Sie sich ein, um Zugang zu Ihrer Lizenz zu erhalten.

Sie haben noch keine Lizenz? Dann Informieren Sie sich jetzt über unsere Produkte:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Weitere Artikel der Ausgabe 3/2020

The effect of large controlling shareholders on equity prices in France: monitoring or entrenchment?

Servitization strategy as a roadmap for the accounting machine

Female management, overconfidence and debt maturity: European evidence

Do boards of directors foster strategic change? A dynamic managerial capabilities perspective

Board size, director compensation, and firm transition across stock exchanges: evidence from Canada

Exploring the relationship between product-service system and profitability