CEO power and corporate social responsibility

Abstract

Purpose The purpose of this paper is to examine the impact of chief executive officer (CEO) power on corporate social responsibility (CSR) performance. Design/methodology/approach The authors use regression analysis to investigate the research question. Findings Using a 23-year panel sample with 1,574 unique US firms and 8,575 firm-year observations, the authors find a significant and negative relation between CEO power and CSR, suggesting that firms with more powerful CEOs engage in less CSR activities. Originality/value The results reveal that more powerful CEOs become less responsive to the needs of stakeholder groups, confirming the validity of the stakeholder theory of CSR.

The Role of CEO Power on CSR Reporting: The Moderating Effect of Linking CEO Compensation to Shareholder Return

“…Thus, the first hypothesis must be rejected. This finding suggests that powerful CEOs tend to support decisions to divulge greater CSR information and runs contrary to past research [18,19,30], which reveals that CEO power has a negative effect on CSR reporting. Thus, our evidence shows that CEOs with more power will be less concerned regarding the cost of CSR activities and their own needs and interests and more oriented toward disclosing CSR information and focusing on stakeholder needs.…”

“…The debate around CSR is more complex to understand when CEOs gain power, as that power can affect CSR reporting [19]. Hence, according to Harper and Sun [30], when CEOs become more powerful, they may not act in the best interests of stakeholders and shareholders. For Bebchuk et al [31], when CEOs become more powerful, they are less likely to engage in CSR activities and more likely to engage in actions to maximize their own interests such as holding or even increasing their power at the expense of stakeholders and shareholders, which suggests a negative relationship between CEO power and CSR disclosure.…”

“…Similarly, Harper and Sun [30] believe that when CEOs become more powerful, they may not act in the best interests of stakeholders and shareholders. Using a sample of 1574 USA-based firms over a period of several years, the authors found a significant and negative relation between CEO power and CSR activities, suggesting that firms with more powerful CEOs engaged in less CSR activity.…”

Audit Committee Features and CSR Disclosure: Additional Evidence From an Emerging Market

“…To determine the influence of AC features on CSRDL in the Jordanian market, we estimate the following ordinary least squares (OLS) regression model with robust standard errors (Alazzani et al, 2019;Appuhami & Tashakor, 2017). We winsorise all variables that have extreme values to overcome the effect of the outlier (Harper & Sun, 2019): CSRDL = CSR disclosure level; β 0 = Intercept; β 1-11 = Variables coefficients; Year is the period of study; and є = Error term (see Table 2 for variables definitions). Barakat et al, 2015;Ghaleb et al, 2020a;Ghaleb et al, 2020b;Khan et al, 2013;Madi et al, 2014;Setiany et al, 2017;Ting, 2020) AC size ACSIZE…”

Is It Necessary to Centralize Power in the CEO to Ensure Environmental Innovation?

“…Thus, our findings add to the upper echelon research empirical evidence regarding a new attribute that characterizes the profile of the CEO of environmentally proactive firms. Furthermore, we show that, although from the agency theory perspective, greater CEO power favors managerial entrenchment, which could inhibit those investments that have a long-term horizon and involve high risks, such as long-term capital investments in environmental projects, leading to a decline in environmental performance (De Villiers et al 2011;Harper and Sun 2019;Sheikh 2019), the greater managerial ability commonly associated with CEO power (Finkelstein 1992;Han et al 2016) counteracts this tendency, since more able CEOs are confident about their capability to compensate for the potential negative results from such investments (García-Sánchez and Martínez-Ferrero 2019). In this sense, our results confirm prior findings regarding a "bright side" of CEO power with regard to corporate sustainability (Walls and Berrone 2017;Li et al 2018;Velte 2019).…”