How does CEO incentive matter for corporate social responsibility disclosure? Evidence from global corporations based in the USA Online publication date: Fri, 14-Oct-2022
by Hien Thi Tran; Hanh Song Thi Pham
International Journal of Business Governance and Ethics (IJBGE), Vol. 16, No. 4, 2022
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.
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