Abstract
This chapter investigates the relationship between the compensation structure of firms' executive team and Corporate Social Responsibility (CSR). We confirm that CSR correlates negatively with the dispersion of compensation of the members of the executive team (pay dispersion). We then examine whether this observed negative relation may be induced by an omitted variable that is related to optimal contracting, including tax considerations (as seen from the stockholders point of view), managerial entrenchment (benefitting the CEO), or a concern for community members (stakeholders rather than stockholders). While we do not find a single omitted variable that may be responsible for the negative relation, our results indicate that CSR may be an element of optimal contracting, may serve stakeholders other than the stockholders and that it may also partly serve as a perk for CEOs.
Original language | English |
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Title of host publication | Behavioral Finance |
Subtitle of host publication | The Coming Of Age |
Publisher | World Scientific Publishing Co. Pte Ltd |
Pages | 331-364 |
Number of pages | 34 |
ISBN (Electronic) | 9789813279469 |
ISBN (Print) | 9789813279452 |
State | Published - 18 Apr 2019 |
Bibliographical note
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