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How does CEO incentive matter for corporate social responsibility disclosure? Evidence from global corporations based in the USA

Author

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  • Hien Thi Tran
  • Hanh Song Thi Pham

Abstract

This study investigates the effect of each component of CEO compensation, including cash-based component (salary and bonus), equity-based component (stock grant and stock option), and other perks on disclosure of corporate social responsibility (CSR) information of global firms. The study uses 2SLS IV estimation method and a sample of 580 US-based firms in a seven-year period. The study finds that equity-based remuneration has a significant and positive impact on a firm's CSR disclosure while CEO salary, bonus, and other perquisites have significant detrimental effects on CSR disclosure. The paper indicates that a CEO's motivation for CSR reporting might arise from stock grant and option; meanwhile, salary, bonus and other perks could demotivate the CEO in this regard. Our findings offer insight into designing CEO compensation packages to meet shareholders' interests and stakeholders' expectations for a sustainable business.

Suggested Citation

  • Hien Thi Tran & Hanh Song Thi Pham, 2022. "How does CEO incentive matter for corporate social responsibility disclosure? Evidence from global corporations based in the USA," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 16(4), pages 463-480.
    • Handle: RePEc:ids:ijbget:v:16:y:2022:i:4:p:463-480
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