Local Tournament Incentives and Corporate Social Responsibility

Yiqing Tan ()
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Yiqing Tan: Hunan University

Journal of Business Ethics, 2024, vol. 194, issue 1, No 11, 228 pages

Abstract: Abstract The objective of this research is to examine whether and how enterprises adjust their corporate social responsibility (CSR) activities in response to top executives’ local tournament incentives. The findings provide evidence to support the claim that local compensation gaps encourage top executives to reduce their CSR performance; furthermore, they indicate that this reduction is accomplished mainly through the CSR categories of diversity, community, the environment and product. The enforceability of noncompete agreements (NCAs) is examined, and the negative relationship between local compensation gaps and CSR is documented to be weaker in states that feature stronger enforcement of NCAs, which constrains labour mobility and imposes turnover costs. The findings of this research are robust to concerns regarding endogeneity and reverse causality.

Keywords: Tournament theory; Local tournament incentives; Corporate social responsibility; Noncompete agreements; Social capital (search for similar items in EconPapers)
JEL-codes: G32 G34 M14 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10551-024-05623-0

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