Managerial risk taking incentives, corporate social responsibility and firm risk

Chakraborty, Atreya; Gao, Lucia Silva; Sheikh, Shahbaz A

doi:10.1016/j.jeconbus.2018.07.004

Cited by 52 publications

(39 citation statements)

References 62 publications

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“…On the other hand, managers involved in responsible actions can benefit from long term pay‐for performance plans as incentives for managerial risk taking underlying social strategic decision making. Consequently, supporting managerial risk taking evidence underlying social engagement, CSR is expected to affect CEO compensation structure and extent (Bugeja, Matolcsy, & Spiropoulos, ; Chakraborty, Gao, & Sheikh, ; Donaldson & Preston, ; Freeman & Reed, ).…”

Section: Theoretical Background and Us–canadian Versus Spanish–frenmentioning

confidence: 90%

How does CEO pay slice influence corporate social responsibility? U.S.–Canadian versus Spanish–French listed firms

Jouber

2019

Corp Soc Responsibility Env

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Considering specific contextual differences (in laws, governance attributes, and CEO pay policies) found between the Anglo-American and the European corporate governance models and controlling for institutional attributes, ownership structures, and firm's features characterizing the two settings, we aim to explore if there is a link between CEO pay slice (CPS) and corporate social responsibility (CSR). We follow Bebchuk et al. (2011) to measure CPS. We consider sustainability indicators as proxy to capture CSR. Sustainability indicators are gathered from Global Reporting Initiative of sustainability standards (GRI's) report. Data cover the period 2010-2017 and consist of 1,440 U.S.-Canadian and Spanish-French firm-year observations. American and Canadian (Spanish and French) firms are considered as to refer to the Anglo-American (European) corporate governance model. Durbin-Wu-Hausman test is ruled to address endogeneity problem of dual variables and supports consistent null hypotheses of fixed effects model. Underthe agency theory's "bright side" paradigm, univariate and multivariate cross-country analysis supports that CPS is positively associated with firm's initiatives to engage in CSR and that sustainability is more pronounced under stronger investor protection, strict law enforcement, and higher corporate governance quality. Robustness checks reveal that (a) the deferred CPS-CSR causal effect seems higher for option-based compensation than that for stock-based compensation and (b) within the options (stocks) rewards, unvested options (restricted stocks) are the most effective to enhance firm's CSR practices.

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Section: Theoretical Background and Us–canadian Versus Spanish–frenmentioning

confidence: 90%

How does CEO pay slice influence corporate social responsibility? U.S.–Canadian versus Spanish–French listed firms

Jouber

2019

Corp Soc Responsibility Env

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“…The cost of debt increases because businesses take advantage of lower risk to increase their leverage. Chakraborty et al (2018) determined that good social responsibility is associated with a higher credit rating of the business. Chakraborty et al (2018) states that managers tend to use social responsibility activities to ensure support from local communities and politicians, reducing the risk that businesses may encounter.…”

Section: Study On the Relationship Between The Level Of The Environmementioning

confidence: 99%

Relationship between Environmental Financial Accounting Practices and Corporate Financial Risk: Evidence from Listed Companies in Vietnams Securities Market

Soa

2019

Asian Economic and Financial Review

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This research assesses the relationship between the level of environmental financial accounting practices (EFAP) and corporate financial risk (CFR). Data was collected from companies listed on Vietnam's securities market for five years from 2013 to 2017. The sample included two groups of companies: one, which followed EFAP and second which did not follow these practices. Based on quantitative research method, this study measured the relationship between levels of EFAP and CFR. The results reveal a close relationship between the EFAP and CFR levels of the current year and that of the following years(s). In addition, the results also point out that, there is a difference in financial risk between both the groups. The study recommends that enterprises should strengthen the environmental financial accounting practices to prevent financial risks in order to gain competitive advantage. Contribution/Originality: This research has examined the impact of the level of EFAP on CFR and found out that the level of EFAP in any current year can avoid the financial risk of not only that year but also prevents the financial risk of the following year.

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“…In addition, they utilize panel vector autoregressive (VAR) along with GMM estimation to test the causal effect between CSR and firm's risk. Chakraborty, Gao, and Sheikh (2019) investigate whether CSR affects firm's risk. Also, they explore whether CSR influence the relation between vega of CEO compensation and firm's risk.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Corporate Social Responsibility (CSR) and Risk Taking: Evidence from Indonesia

Mulia

Joni

2019

JOFRP

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In this paper, we investigate the effect of Corporate Social Responsibility (CSR) on risk taking in Indonesia. We hand collect CSR and other corporate governance data from 2016-2017 for publicly listed firms on the Indonesian Stock Exchange (IDX). The results, based on 820 firm-year observations, suggest that CSR activity is negatively related to corporate’s risk. This means the presence of CSR activity is positively perceived by stakeholders. Therefore, it reduces operating and market risks of the company. Also, we test for endogeneity and the main findings remain similar.

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Managerial risk taking incentives, corporate social responsibility and firm risk

Cited by 52 publications

References 62 publications

How does CEO pay slice influence corporate social responsibility? U.S.–Canadian versus Spanish–French listed firms

How does CEO pay slice influence corporate social responsibility? U.S.–Canadian versus Spanish–French listed firms

Relationship between Environmental Financial Accounting Practices and Corporate Financial Risk: Evidence from Listed Companies in Vietnams Securities Market

Corporate Social Responsibility (CSR) and Risk Taking: Evidence from Indonesia

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