CEO Innate Altruism and Firm Corporate Social Responsibility
58 Pages Posted: 22 Aug 2022
Date Written: August 16, 2022
Abstract
This paper examines the role of CEO’s innate altruism in explaining firm corporate social responsibility (CSR) performance by studying a sample of U.S. firms that are S&P 1500 components over the period 1997-2018. Building on the literature that highlights the importance of cultural heritage in shaping individuals’ beliefs and values, we measure CEOs’ innate altruism using the preference scores from the Global Preference Survey (GPS) associated with the CEOs’ countries of origins. We find that firms led by more altruistic CEOs have stronger CSR performance. This result remains robust to controlling for a variety of firm attributes (financials and corporate governance controls) and CEOs’ individual characteristics (such as age, gender, tenure), as well as to a battery of robustness checks and endogeneity tests, including propensity score matching and difference-in-difference regressions around exogenous CEO turnover events. We also find that the link between CEO altruism and CSR is stronger in well-governed firms where the CEO is not overly powerful. In addition, firms with more altruistic CEOs do not show worse financial performance, suggesting that altruism, as an innate trait of CEOs, is not value-destroying for shareholders.
Keywords: CSR, Cultural Heritage, CEO Altruism, Corporate Governance
JEL Classification: G30, G34, M12, M14
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