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Local Tournament Incentives and Corporate Social Responsibility

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  • Yiqing Tan

    (Hunan University)

Abstract

The objective of this research is to examine whether and how enterprises adjust their corporate social responsibility (CSR) activities in response to top executives’ local tournament incentives. The findings provide evidence to support the claim that local compensation gaps encourage top executives to reduce their CSR performance; furthermore, they indicate that this reduction is accomplished mainly through the CSR categories of diversity, community, the environment and product. The enforceability of noncompete agreements (NCAs) is examined, and the negative relationship between local compensation gaps and CSR is documented to be weaker in states that feature stronger enforcement of NCAs, which constrains labour mobility and imposes turnover costs. The findings of this research are robust to concerns regarding endogeneity and reverse causality.

Suggested Citation

  • Yiqing Tan, 2024. "Local Tournament Incentives and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 194(1), pages 211-228, September.
    • Handle: RePEc:kap:jbuset:v:194:y:2024:i:1:d:10.1007_s10551-024-05623-0
    DOI: 10.1007/s10551-024-05623-0
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    Cited by:

    1. Thomas R. Kubick & G. Brandon Lockhart & David C. Mauer, 2024. "Industry tournament incentives and debt contracting," Review of Quantitative Finance and Accounting, Springer, vol. 63(4), pages 1281-1321, November.

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    More about this item

    Keywords

    Tournament theory; Local tournament incentives; Corporate social responsibility; Noncompete agreements; Social capital;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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