Executive Compensation and Corporate Social Responsibility: Evidence from Chinese-listed SOEs
33 Pages Posted: 2 Feb 2020
Date Written: January 4, 2020
Based on annual data for Chinese-listed state-owned enterprises (SOEs) over the period 2013-2018, this research explores the effect of executive compensation on corporate social responsibility (CSR) performance. Our empirical results show that the executive compensation of SOEs has an inverted U-shaped effect on CSR fulfillment, and that the inverted U-shaped effect is robust to endogeneity corrections. Subsample analysis suggests that marginal contributions of executive compensation on CSR performance are different in the secondary industry and service industry. The ERG hierarchy of needs and the upper echelon theory help explain the non-linear effects. Based on the empirical results, this paper provides a new channel of unlocking the dynamics of CSR fulfillment.
Keywords: Corporate social responsibility; Executive compensation; State-owned enterprises; Inverted U-shaped effect; China
JEL Classification: G34, G38, O16
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