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Are CEOs judged on their companies' social reputation?

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  • Cai, Xiangshang
  • Gao, Ning
  • Garrett, Ian
  • Xu, Yan

Abstract

How consequential is social reputation for a CEO's career? We find that the CEOs of those firms with greater strengths (controversies) on corporate social responsibilities (CSR) are more (less) likely to serve on external boards, and they hold more (fewer) outside directorships. CEOs lose board seats after the media expose their companies in negative environmental and social news. More nuanced analyses show that workplace diversity and supply-chain human rights are most consequential among the social and environmental dimensions of CSR. Our study demonstrates that CEOs are judged on their companies' social reputation in the director labor market. Our results also suggest that social reputation plays an important role in promoting CSR.

Suggested Citation

  • Cai, Xiangshang & Gao, Ning & Garrett, Ian & Xu, Yan, 2020. "Are CEOs judged on their companies' social reputation?," Journal of Corporate Finance, Elsevier, vol. 64(C).
    • Handle: RePEc:eee:corfin:v:64:y:2020:i:c:s0929119920300651
    DOI: 10.1016/j.jcorpfin.2020.101621
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    More about this item

    Keywords

    Social reputation; Stakeholders; Corporate social responsibility (CSR); Director labor market; CEO; Outside directorship;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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