Corporate Social Responsibility and Managerial Entrenchment

Giacinta Cestone () and Giovanni Cespa

No 4648, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: When stakeholder protection is left to the voluntary initiative of managers, relations with social activists may become an effective entrenchment strategy for inefficient CEOs. We thus argue that managerial turnover and firm value are increased by the institutionalization of stakeholder protection depriving incumbent CEOs of activists? support. This finding provides a rationale for the emergence of specialized institutions (social auditors and ethic indexes) that help firms commit to stakeholder protection even in case of managerial replacement. Our theory also explains a recent trend whereby social activist organizations and institutional shareholders are showing a growing support for each others? agenda.

Keywords: Corporate governance; Corporate social responsibility; Managerial entrenchment; Social activism; Stakeholders (search for similar items in EconPapers)
JEL-codes: G34 G38 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-fin
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Citations: View citations in EconPapers (47)

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Related works:
Working Paper: Corporate Social Responsability and Managerial Entrenchment (2015)
Journal Article: Corporate Social Responsibility and Managerial Entrenchment (2007)
Working Paper: Corporate Social Responsibility and Managerial Entrenchment (2007)
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