CEO Materialism and Corporate Social Responsibility

71 Pages Posted: 14 Jun 2016

See all articles by Robert H. Davidson

Robert H. Davidson

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems

Aiyesha Dey

Harvard Business School

Abbie J. Smith

University of Chicago - Booth School of Business

Date Written: March 23, 2016

Abstract

We study the role of individual CEOs in explaining corporate social responsibility (CSR) scores. We show that CEO fixed-effects explain 63% of the variation in CSR scores, a significant portion of which is attributable to a CEO’s “materialism” (relatively high luxury asset ownership). Specifically, firms led by materialistic CEOs have lower CSR scores, and increases in CEOs’ materialism are associated with declining scores. Finally, CSR scores in firms with non-materialistic CEOs are positively associated with accounting profitability. In contrast, CSR scores in firms with materialistic CEOs are unrelated to profitability on average; however this association is decreasing in CEO power.

Keywords: Executive materialism, corporate social responsibility, accounting profitability

JEL Classification: G30, G34, G38

Suggested Citation

Davidson, Robert H. and Dey, Aiyesha and Smith, Abbie J., CEO Materialism and Corporate Social Responsibility (March 23, 2016). Chicago Booth Research Paper No. 16-11; Fama-Miller Working Paper Forthcoming. Available at SSRN: https://ssrn.com/abstract=2794099 or http://dx.doi.org/10.2139/ssrn.2794099

Robert H. Davidson

Virginia Polytechnic Institute & State University - Department of Accounting and Information Systems ( email )

Pamplin College of Business
Blacksburg, VA 24061
United States

Aiyesha Dey

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Abbie J. Smith (Contact Author)

University of Chicago - Booth School of Business ( email )

1101 East 58th Street
Graduate School of Business
Chicago, IL 60637-1561
United States
773-702-7295 (Phone)
773-702-0458 (Fax)

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