Entrenchment through corporate social responsibility: Evidence from CEO network centrality

Salim Chahine, Yiwei Fang, Iftekhar Hasan and Mohamad Mazboudi

International Review of Financial Analysis, 2019, vol. 66, issue C

Abstract: This paper investigates whether CEOs with high network centrality entrench themselves when taking CSR decisions and how that affects firm value. Evidence portrays that CSR in firms with more central CEOs is negatively associated with firm-value, and this association is mitigated by better corporate governance mechanisms and by geographic areas of higher social capital. This negative association is lower during disasters which reflect periods of positive exogenous shocks to the societal demand for CSR. Furthermore, CSR by more central CEOs is positively associated with future increases in CEO compensation and future improvement in a CEO's network position. The findings reveal that, in general, central CEOs use CSR to entrench themselves and gain private benefits rather than increase shareholder value.

Keywords: Corporate social responsibility; Network centrality; Corporate governance; Firm value; CEO compensation (search for similar items in EconPapers)
JEL-codes: D85 L14 M14 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:66:y:2019:i:c:s1057521919300614

DOI: 10.1016/j.irfa.2019.04.010

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