CEO Tenure, Corporate Social Performance, and Corporate Governance: A Korean Study

Jun Hyeok Choi, Saerona Kim and Ayoung Lee
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Jun Hyeok Choi: Department of Accounting, Jeonbuk National University, Jeonju-si 54896, Korea
Saerona Kim: Department of Accounting, Gyeongsang National University, Jinju City 52828, Korea
Ayoung Lee: Department of Accounting, Kangwon National University, Chuncheon-si 24341, Korea

Sustainability, 2019, vol. 12, issue 1, 1-17

Abstract: The purpose of this study was to examine the association between Chief Executive Officer (CEO) tenure and corporate social performance with the moderating effect of governance. We investigated whether new CEOs and CEOs in their last year of service were more focused on short-termism than CEOs of other periods. Specifically, we tested whether these CEOs reduced social performance that demands immediate expenditure and expect payoffs in the long run. We also tested whether good governance can mitigate such behaviors, because not all CEOs of the same tenure will act the same, depending on the monitoring environments surrounding them. We employed ordinary least squares (OLS) method and the moderator models using data from the Korean listed companies from 2012 to 2016. Test results showed that only the CEOs of their last year reduced social performance. However, when we considered corporate governance, we found that both groups of CEOs reduced social performance, and that good governance mitigated the adverse effects of the two periods on Corporate Social Responsibility (CSR). Specifically, we tested board independence, board frequency, CEO duality, and board diversity, and found that, for all but board independence, the negative effects of the two periods on social performance were decreased.

Keywords: CEO tenure; corporate social responsibility (CSR); corporate social performance; corporate governance; early stage of tenure; horizon problem (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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