Board-level employee representation and corporate sustainability: A focus on executive compensation programs

Sandra Cavaco (), Patricia Crifo and Antoine Reberioux ()
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Sandra Cavaco: LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - Université Paris-Panthéon-Assas
Antoine Reberioux: LADYSS - Laboratoire Dynamiques Sociales et Recomposition des Espaces - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique - UPCité - Université Paris Cité

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Abstract: This paper explores the impact of board-level employee representation (BLER) on Corporate Social Responsibility (CSR) contracting, i.e. the integration of non-financial criteria into top executive officers' compensation. We exploit the enactment of two laws (in 2013 and 2015) that mandated the presence of employee directors in large French companies to identify a causal impact in a staggered difference-in-differences design. Our findings show that BLER significantly increases the likelihood of implementing CSR contracting, especially when employee directors are members of the compensation committee (a unique feature of the French system). In addition, using an instrumental variables (IV) approach, we show that CSR contracting has a significant, positive impact on CSR performance. This study opens up avenues for future research to delve deeper into the role of employee representation in corporate governance and CSR.

Keywords: board-level employee representation; corporate social responsibility contracting; executive compensation; compensation committee; staggered difference-in-differences (search for similar items in EconPapers)
Date: 2025-07-15
Note: View the original document on HAL open archive server: https://hal.science/hal-05273679v1
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