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Empirical examination of the direct and moderating role of corporate social responsibility in top executive compensation

Mahfuja Malik (Department of Accounting and Information Systems, Sacred Heart University, Fairfield, Connecticut, USA)
Eunsup Daniel Shim (Department of Accounting and Information Systems, Sacred Heart University, Fairfield, Connecticut, USA)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 13 May 2022

Issue publication date: 23 September 2022

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Abstract

Purpose

The purpose of this study is to examine the direct association between firms’ corporate social responsibility (CSR) scores, CSR disclosures and executive compensation. This study further investigates the moderating role of CSR in the association between executive compensation and firms’ stock market and accounting performances.

Design/methodology/approach

This study collects CEO compensation information from the Execucomp database and CSR performance information from the MSCI ESG database. The final sample consists of 4,193 firm-year observations for 1,318 US public firms for the period 2009–2013. This study uses lagged regression analysis to test the direct and moderating roles of CSR in executive compensation.

Findings

Regarding the direct role of CSR, this study finds that CEO compensation is positively related to CSR performance but not to firms’ issuance of CSR reports. This study also finds a positive moderating role of CSR in the relationship between CEO compensation and firms’ stock performance. However, the authors do not identify any role for CSR in the relationship between CEO compensation and accounting performance. The results also show a negative association of CSR in the relationship between CEO compensation and firm size.

Originality/value

This study fills a gap in the literature by providing empirical evidence on the direct association between CSR and CEO compensation and how the association between CEO compensation and firm performance is moderated by CSR scores. The novel findings of this study will benefit managers, boards of directors, shareholders and other stakeholders, including regulators and policymakers.

Keywords

Citation

Malik, M. and Shim, E.D. (2022), "Empirical examination of the direct and moderating role of corporate social responsibility in top executive compensation", Pacific Accounting Review, Vol. 34 No. 5, pp. 708-727. https://doi.org/10.1108/PAR-09-2021-0162

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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