Purpose The purpose of this paper is to empirically test the predictions in Titman (1984) and Berk et al. (2010) which indicate that firms with higher leverage will pay chief executive officer (CEO) and employee more. In addition, this paper examines whether financial distressed firms utilize leverage as a bargaining tool to reduce labor costs. Design/methodology/approach This paper conducts ordinary least squares regression analysis to investigate: CEO compensation which represents critical employees and lower-level employee compensation which represents less critical employees. Empirical data consist of US publicly held companies during the period between 2006 and 2013. Findings This paper finds that firms with higher levels of leverage tend to compensate employees for their human capital risk and that financially distressed firms consider leverage a bargaining tool by which to depress labor costs, which leads to lower employee compensation as compared to that of financially healthy firms. Research limitations/implications This paper highlights the importance of keeping balance between human capital and labor costs. In the case that human capital risk might not be fully compensated by firms facing financial distress, vicious cycle could occur because a failure of considering human capital might invite unrecoverable consequence. This could be done in future research. Originality/value This paper has three contributions. First, this paper supports the Titman (1984) and Berk et al. (2010) by empirically documenting that high-leveraged firms compensate their employees for potential human capital risk. Second, this paper adds to the literature by empirically providing that human capital risk might not be fully compensated if the firms are facing financial distress. Finally, this paper contributes to the authorities by showing that employees’ interests may be sacrificed if the firm is under financial distress.

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This study examines the impact of CSR activities on corporate financial performance by using data from 514 listed companies in Taiwan during the period of the 2008 financial crisis. To measure the CSR performance, this study refers to independent international CSR valuation institutions to compile CSR indicators for individual Taiwanese firms. The results show that CSR activities before the 2008 financial crisis are associated with positive stock returns during the crisis. In addition, after comparing the in-crisis and post-crisis periods, it is found that CSR indeed offers an insurance value for a firm's stock performance during the crisis period. We conclude that CSR does play a protective role for firms when a market encounters a widespread trust crisis. Furthermore, the results highlight the importance of wider engagement in CSR practices for firms, not only to boost their reputation but also for the insurance value, which will pay off during unexpected negative trust events. Contribution/Originality:This study uses a new estimation methodology to evaluate the CSR performance of listed firms in Taiwan during the financial crisis period. The paper not only addresses the problem of a lack of consistent CSR metrics for firms in a developing economy but also proposes a reasonable method for evaluating these firms' environmental efforts. INTRODUCTIONWith the collapse of Lehman Brothers during the financial crisis of 2007-2008, the trust in the global capital market was eroded, highlighting the importance of Corporate Social Responsibility (CSR) investments at the firm level. According to a recent study, Lins, Servaes, and Tamayo (2017) suggest that firm-specific social capital can be viewed as an insurance policy that pays off when stakeholders, as well as the entire economy, are faced with a serious trust crisis. Other studies demonstrate that social performance creates not only wealth-enhancing value but also insurance value that is captured in stock markets (Ducassy, 2013;Oikonomou, Brooks, & Pavelin, 2012).In recent decades, CSR has gained worldwide attention in various industries. The scholarly definition of CSR approaches is relatively broad, and it is commonly understood as the methods by which companies integrate social, environmental, and stakeholder concerns in their business operations (European Commission, 2011). The development of CSR involves high levels of attention not only to conducting CSR activities but also to maximizing

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Purpose The purpose of this study is to investigate whether financial institutions, which are highly regulated entities, experience fewer sanctions and have lower penalties (mandatory and regulatory) if they have better corporate governance performance (voluntary). Design/methodology/approach This study uses unique corporate governance data endorsed by the authorities and sanction information for financial institutions in Taiwan from 2014 to 2020 to examine whether regulatory compliance is associated with corporate governance for financial institutions. This study also examines the moderating effects of shareholding concentration, governmental shareholding and foreign institution shareholding on this relationship. Findings The positive association between compliance and governance is found. In addition, partial results show that the positive relationship is less profound when the shareholder concentration is higher and more profound when government shareholdings are higher. Originality/value The findings of this study support the premise that a well-structured, non-mandatory corporate governance evaluation mechanism, that is actively established and monitored by the appropriate authorities, may influence the compliance performance of financial institutions which is mandatory and minimum social requirements.