The relation between executive compensation and corporate social responsibility

Ivan Brick*, Oded Palmon, Itzhak Venezia

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapterpeer-review

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 languageEnglish
Title of host publicationBehavioral Finance
Subtitle of host publicationThe Coming Of Age
PublisherWorld Scientific Publishing Co. Pte Ltd
Pages331-364
Number of pages34
ISBN (Electronic)9789813279469
ISBN (Print)9789813279452
StatePublished - 18 Apr 2019

Bibliographical note

Publisher Copyright:
© 2019 by World Scientific Publishing Co. Pte. Ltd. All rights reserved.

Fingerprint

Dive into the research topics of 'The relation between executive compensation and corporate social responsibility'. Together they form a unique fingerprint.

Cite this