The Impact of CSR on the Asymmetric Pay-for-Performance Sensitivity of CEO Compensation

Kyoungwon Mo, Park Kyung Jin and Kim YoungJin
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Kyoungwon Mo: Chung-Ang University, Postal: Chung-Ang University
Park Kyung Jin: Myongji University, Postal: Myongji University
Kim YoungJin: Korea Advanced Institute of Science and Technology, Postal: Korea Advanced Institute of Science and Technology

International Journal of Entrepreneurship, 2018, vol. 22, issue 4

Abstract: t was examine whether the Corporate Social Responsibility (CSR) activities affect the asymmetric P ay - for - Performance Sensitivity (PPS) of the compensation of a firm’s Chief Executive Offic er (CEO). Recent studies find that while a CEO’s compensation increases by a large amount when the firm’s performance is good, it dec r eases only by a small amount when the performance is poor. This study shows that such downward CEO compensation stickiness is mitigated by the firm’s CSR performance. Using various regression analyses, we find that CSR not only decreases the excessively high PPS for positive performance firms, but also increases the excessively low PPS for negative performance firms. This result can be evidence consistent with the theory that the CSR benefits the shareholders .

Keywords: Corporate Social Responsibility; CEO Pay-For-Performance Sensitivity; CEO Compensation Stickiness; Agency Problem; CEO Power. (search for similar items in EconPapers)
JEL-codes: M21 (search for similar items in EconPapers)
Date: 2018
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