CEO Pay Sensitivity (Delta and Vega) and Corporate Social Responsibility

Atif Ikram, Zhichuan (Frank) Li and Travis MacDonald
Additional contact information
Atif Ikram: Department of Finance, Arizona State University, Tempe, AZ 85281, USA
Zhichuan (Frank) Li: Ivey Business School, University of Western Ontario, London, ON N6A 3K7, Canada
Travis MacDonald: Department of Economics, University of Western Ontario, London, ON N6A 3K7, Canada

Sustainability, 2020, vol. 12, issue 19, 1-20

Abstract: We use CEO pay sensitivity to stock performance (delta) and stock volatility (vega) to provide empirical evidence that CEO compensation structure influences firm Corporate Social Responsibility (CSR) performance. We find that delta has no significant effect on CSR, while vega has a strong, causal relationship with CSR. Our findings suggest that CEOs do not view CSR as value enhancing, but as a way to increase their own compensation through vega. Firms that want to improve their social performance should consider vega as an important compensation incentive for executives.

Keywords: executive compensation; managerial incentives; corporate social responsibility; corporate social performance; firm risk; delta; vega; agency problem (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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