The Threshold Effect of Executive Compensation on Corporate Environmental Responsibility: Based on the Moderating Effect of Industry Competition

Yang Zhang and Xinxin Zhang
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Yang Zhang: School of Business Administration, Hunan University of Technology and Business, Changsha 410205, China
Xinxin Zhang: Business School, Central South University, Changsha 410083, China

Sustainability, 2022, vol. 14, issue 14, 1-24

Abstract: In recent years, the relationship between the executive characteristics and corporate environmental responsibility has attracted much attention from academia, especially the relationship between executive compensation and corporate environmental responsibility. Based on the panel data of China’s Shanghai and Shenzhen A-share listed manufacturing companies from 2006 to 2018, this paper empirically tests the threshold effect of executive compensation on corporate environmental responsibility and explores this relationship under the moderation of industry competition. The results show the following: (1) The impact of executive compensation on corporate environmental responsibility represents a U-shaped threshold effect; that is, the promotion of corporate environmental responsibility by executive compensation only appears after reaching a certain boundary. (2) Industry competition has a positive moderating effect, which will shift the inflection point of the U-shaped curve between executive compensation and corporate environmental responsibility to the left. (3) Executive compensation of companies of different attributes, sizes, and regions has an impact on corporate environment responsibility, and industry competition has a varying impact on executive compensation and corporate environmental responsibility. This paper is based on the special situation of China and can be used for reference to other developing countries. This study not only expands the research perspective of corporate environmental responsibility and further reveals and verifies the manager effect in the field of environmental performance, but also has practical significance to further give full play to the incentive effect of compensation on corporate non-financial performance.

Keywords: corporate environmental responsibility; executive compensation; industry competition; threshold effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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