Do tournament incentives motivate chief executive officers to be socially responsible?

Shahid Ali, Junrui Zhang, Muhammad Usman, Muhammad Kaleem Khan, Farman Ullah Khan and Muhammad Abubakkar Siddique

Managerial Auditing Journal, 2020, vol. 35, issue 5, 597-619

Abstract: Purpose - This study aims to investigate the question concerning whether tournament incentives motivate chief executive officers (CEOs) to be socially responsible. Design/methodology/approach - Data from all A-share Chinese companies listed on the Shanghai and Shenzhen stock exchanges for the period from 2010 to 2015 are used. To draw inferences from the data, ordinary least squares (OLS) regression and cluster OLS are used as a baseline methodology. To control for the possible issue of endogeneity, firm-fixed-effects regression, two-stage least squares regression and propensity score matching are used. Findings - A reliable evidence is found that tournament incentives motivate CEOs to be more socially responsible. Additional analysis reveals that the positive effect of CEO tournament incentives on corporate social responsibility performance (CSRP) is more pronounced in state-owned firms than it is in non-state-owned firms. The study’s findings are consistent with tournament theory and the conventional wisdom hypothesis, which proposes that better incentives lead to competitiveness, which improves financial and social performance. Practical implications - The study’s findings have implications for companies and regulators who wish to enhance CSRP by giving tournament incentives to top managers. Investment in social responsibility may reduce the conflict between executives and employees and improve the corporate culture. Originality/value - This study contributes to the existing literature by providing the first evidence that CEOs’ tournament incentives play a vital role in CSRP. The study’s findings contribute to tournament theory.

Keywords: China; Corporate social responsibility; State-owned enterprises; CEO tournament incentive; Tournament theory; M12; M52; M14; H17 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:maj-05-2019-2288

DOI: 10.1108/MAJ-05-2019-2288

Access Statistics for this article

Managerial Auditing Journal is currently edited by Professor Jie Zhou

More articles in Managerial Auditing Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().