Does CEO debt-like compensation mitigate corporate social irresponsibility?

Long Chen, Guanming He and Gopal V. Krishnan

Accounting Forum, 2024, vol. 48, issue 4, 594-634

Abstract: Corporate social irresponsibility (CSI) is an increasingly relevant topic to today's business, as CSI may exert stronger impacts on firms than corporate social responsibility (CSR). However, little is known about mechanisms that can constrain such irresponsible actions. We examine whether CEO debt-like compensation (i.e. pension and deferred compensation granted to the CEO of a firm) mitigates CSI, which is proxied by environmental, social and governance (ESG) risk exposure. Using media coverage of ESG incidents as a measure, we find that ESG risk exposure is negatively related to CEO debt-like compensation. Furthermore, this relation is stronger when firms have higher distress risks or when CEOs have greater career concerns.

Date: 2024
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DOI: 10.1080/01559982.2023.2195983

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