IDEAS home Printed from https://ideas.repec.org/a/spt/apfiba/v5y2015i6f5_6_4.html
   My bibliography  Save this article

Corporate Social Responsibility and Financial Performance: Does CEO Compensation Really Matter?

Author

Listed:
  • Chih-Wei Peng
  • Yu-Cheng Chen

Abstract

With the increasing emphasis on environmental protection in the global economy, CEOs are under immense pressure from their stakeholders to improve corporate social responsibility (CSR). However, prior studies have contradictory conclusions about the relationship between CSR and financial performance (FP). We thus extend prior research by investigating whether CEO compensation moderates the CSR-FP link. This study uses US firm data from the KLD database for the period 2003-2011. The results of the empirical analysis indicate that CEO compensation with a long-run focus can positively moderate the link between the people aspect of CSR and long-run FP. This is thus consistent with signaling theory, which states that CEO compensation with a long-run focus increases the incentive to hire women and minorities, and enhances the good treatment of employees. As a result, firms engaging more in the people aspect of CSR activities tend to have greater overall long-run profitability.

Suggested Citation

  • Chih-Wei Peng & Yu-Cheng Chen, 2015. "Corporate Social Responsibility and Financial Performance: Does CEO Compensation Really Matter?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 5(6), pages 1-4.
    • Handle: RePEc:spt:apfiba:v:5:y:2015:i:6:f:5_6_4
    as

    Download full text from publisher

    File URL: http://www.scienpress.com/Upload/JAFB%2fVol%205_6_4.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Meng, Qingbin & Wang, Song & Zhong, Ziya, 2024. "The effect of directors' and officers' liabilities insurance on corporate social responsibility evidence from China," International Review of Financial Analysis, Elsevier, vol. 93(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spt:apfiba:v:5:y:2015:i:6:f:5_6_4. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.scienpress.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.