Founder CEOs, personal incentives, and corporate social irresponsibility

Xi Zhong, Liuyang Ren and Ge Ren

Business Ethics, the Environment & Responsibility, 2022, vol. 31, issue 1, 17-32

Abstract: This study integrates organizational identity (OI) theory and upper echelons theory to explore the impact of CEOs’ founder status on corporate social irresponsibility (CSI). We theorize that compared with other CEOs, a founder CEO is more likely to generate a high degree of OI with the firm, which will drive the founder CEO to actively avoid CSI that may damage the positive image and long‐term development of the firm. Furthermore, we argue that CEO duality and CEO ownership will strengthen the aforementioned relationship by increasing the possibility of founder CEOs generating a high degree of OI. Conversely, CEO underpayment will weaken the relationship between founder status and CSI by decreasing the possibility of founder CEOs generating a high degree of OI. We obtained empirical evidence in support of our arguments from a large Chinese private listed company dataset. Overall, this study’s theory and evidence clearly show that founder status and personal incentives can jointly shape CEOs’ CSI decisions, thereby providing useful insights for corporate shareholders and government agencies to better prevent and govern firms’ CSI.

Date: 2022
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https://doi.org/10.1111/beer.12389

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Persistent link: https://EconPapers.repec.org/RePEc:wly:buseth:v:31:y:2022:i:1:p:17-32

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