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

Malik, Mahfuja; Shim, Eunsup Daniel

doi:10.1108/par-09-2021-0162

Cited by 10 publications

(14 citation statements)

References 58 publications

(80 reference statements)

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“…Jian and Lee (2015) have found that CSR is associated with higher executive pay, but any excess investment in CSR is associated with lower pay, which supports the optimal contracting view. Karim et al (2018) and Malik and Shim (2022) have reported a direct positive relationship between CSR and CEO compensation, supporting the optimal contracting argument that managerial pursuits of CSR align well with shareholder interests. Some studies, such as Borghesi et al (2014) and Masulis and Reza (2015), have found no significant link between total CEO pay and CSR investments.…”

Section: Literature Review and Research Hypotheses 11 Direct Associat...mentioning

confidence: 59%

“…Given the documented positive association between executive pay and past performance (Malik and Shim, 2019;Shim and Kim, 2015;Tosi et al, 2000), ESG could be indirectly linked to executive pay through firm performance. For instance, Malik and Shim (2022) have reported a positive moderating role of CSR in the relationship between CEO compensation and stock performance.…”

Section: Indirect Association Between Esg and Executive Paymentioning

confidence: 99%

“…The meta-analysis by Tosi et al (2000) has concluded that the relationship between past financial performance and CEO compensation is generally positive, but the correlations range between À0.03 and 0.41, which suggests that other dimensions of performance are also factored in. A large body of literature has documented the determinants of executive pay, including past financial performance (Malik and Shim, 2022;Shim and Kim, 2015;Tosi et al, 2000), firm size (Agarwal, 1981;Lambert et al, 1991;Malik and Shim, 2022;Rosen, 1982;Tosi et al, 2000), capital structure (Houston and Shan, 2022;Hughen et al, 2019;John et al, 2010;John and John, 1993;Malik and Shim, 2019;Ortiz-Molina, 2005), and CEO reputation (Milbourn, 2003). We explore whether executive pay is associated with ESG-specific performance.…”

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confidence: 99%

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Managerial incentives for ESG in the financial services industry: direct and indirect association between ESG and executive compensation

Lee,

Koh,

Shim

2023

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PurposeThis study investigates the empirical association between environmental, social and corporate governance (ESG) performance and top executive compensation in the US financial services industry. Considering that financial firms can inflict systemic shocks across the economy, it has been argued that they must conduct ethical and sustainable business in accordance with ESG principles. This study examines whether ESG efforts are beneficial to managers.Design/methodology/approachThe authors use CEO compensation and ESG performance ratings data for all US financial firms (SIC 6000–6799) from 2015 to 2019. Employing fixed effects regressions, the authors test whether lagged ESG performance is related to CEO compensation, after controlling for other firm characteristics such as size, financial performance, leverage and CEO stock ownership.FindingsThe authors find that lagged ESG ratings are strongly associated with all forms of compensation. An increase of one standard deviation in the composite ESG rating is associated with a 14%–16% increase in the total pay. Among the three ESG pillars, only S (social) and G (governance) exhibit persistent and significant associations with both short- and long-term executive pay. The authors also document the significant moderating effects of ESG on the relationships among firm performance, size, leverage, ownership and executive pay, identifying how ESG is associated with compensation.Originality/valueThe authors conclude that managers receive ESG incentives implicitly and explicitly. The novel finding of direct and indirect associations between ESG and top executive compensation contributes to the growing ESG literature on the financial sector and ongoing debate about the explicit inclusion of ESG targets in compensation design.

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Section: Literature Review and Research Hypotheses 11 Direct Associat...mentioning

confidence: 59%

Section: Indirect Association Between Esg and Executive Paymentioning

confidence: 99%

mentioning

confidence: 99%

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Managerial incentives for ESG in the financial services industry: direct and indirect association between ESG and executive compensation

Lee,

Koh,

Shim

2023

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“…Punishment and obedience orientations give the consequences of good or bad actions regardless of the value of the consequences. An appropriate salaries and benefits must be provided in order to attract employee integrity and performance improvement, even though different compensation scheme has different effect on certain industry [8,9] It is important to provide appropriate compensation to agents, not only affecting productivity and quality of work but also reducing the tendency of civil servants to engage in corrupt practices. This theory is in line with previous research [10] Where the results of the study stated that the suitability of compensation has a negative effect on the tendency of fraud.…”

Section: Literature Reviewmentioning

confidence: 99%

Analysis of Information System Implementation, Compensation and Reliability of Internal Control to the Financial Fraud Prevention

Amelia

Samara

Vemly

2023

AJEBA

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This research examines the implementation of information system, compensation, and internal control toward the effect on financial fraud prevention. The study conducted in one of the largest chemical distribution company in Indonesia, with the financial staff of the headquarter as the respondent. Data gathered by using total sampling, and examine by using regression analysis. Result shows that the implementation of information system and compensation can prevent financial fraud, but compensation is not. the significant of the result is, compensation works on preventing financial fraud when the information system and internal control applied. To develop stringer impact, future research expected to have wider scope of respondent and using smaller alpha score to see the different of the research and to add the qualitative perspective.

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“…the firms that never completed SSSR or were listed after 2005) for the comparison of the sample firms before and after the completion of SSSR. We then exclude 847 firm-year observations in the finance and insurance industry, given that the industries exhibit different characteristics from other industries (Malik and Shim, 2022). Further, 2,816 firm-year observations are then removed due to their involvement with abnormal activities, including those specially treated in the stock exchanges, IPOs, delistings or suspended listings, during the sample period [12].…”

Section: Sample and Datamentioning

confidence: 99%

Auditors’ response to earnings management after split-share structure reform in China

阿部

Azizkhani

Jiang

2023

PAR

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Purpose This study aims to investigate whether and how auditors responded to the documented increases in earnings management after split-share structure reform (SSSR) in China, as manifested in auditors’ propensity to issue modified audit opinions (MAOs) after the SSSR. This study further investigates how client importance and auditor size influence auditors’ response to earnings management after the SSSR. Design/methodology/approach This study adopts logit regression models to investigate auditors’ propensity to issue MAOs to their clients that appear to manage earnings after the SSSR. Initially, including all Chinese publicly listed firms from the CSMAR database, the sample for final analyses consists of 21,904 firm-year observations for 1,290 unique listed firms during the period 2001–2020. The sample period surrounds the implementation of the SSSR, which started in 2005, allowing the examination of auditors’ propensity to issue MAOs after vis-à-vis before the SSSR. Findings The authors find that non-Big10 auditors in China were less likely to issue MAOs to their economically important clients who appear to manage earnings after SSSR. However, in the years of non-tradeable shares being released to the markets, both Big10 and non-Big10 auditors were less likely to issue MAOs to their economically important clients who appear to manage earnings. The findings suggest that auditors may have compromised auditor independence in response to earnings management after the SSSR, likely due to the pressure from their economically important clients. Originality/value This paper contributes to the literature, specifically the practice and theory in auditing, by shedding light on ever-changing auditors’ reporting behaviour, especially with regard to auditor independence. It also adds to the growing body of literature on the impact of institutional changes on auditing practices worldwide. The findings of this study further suggest that the recently documented declining demand for high-quality audits after the SSSR may be motivated by the clients’ intention to manage earnings after the SSSR.

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

Cited by 10 publications

References 58 publications

Managerial incentives for ESG in the financial services industry: direct and indirect association between ESG and executive compensation

Managerial incentives for ESG in the financial services industry: direct and indirect association between ESG and executive compensation

Analysis of Information System Implementation, Compensation and Reliability of Internal Control to the Financial Fraud Prevention

Auditors’ response to earnings management after split-share structure reform in China

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