Are CEOs Judged on Their Companies' Social Reputation?

Posted: 4 May 2020 Last revised: 28 Nov 2020

See all articles by Xiangshang Cai

Xiangshang Cai

University of Essex - Essex Business School; University of Manchester - Alliance Manchester Business School

Ning Gao

Manchester Accounting and Finance Group, Alliance Manchester Business School, University of Manchester

Ian Garrett

Manchester Business School

Yan Xu

University of Manchester - Alliance Manchester Business School

Date Written: April 8, 2020

Abstract

How consequential is social reputation for a CEO's career? We find that the CEOs of those firms with greater strengths (controversies) on corporate social responsibilities (CSR) are more (less) likely to serve on external boards, and they hold more (fewer) outside directorships. CEOs lose board seats after the media expose their companies in negative environmental and social news. More nuanced analyses show that workplace diversity and supply-chain human rights are most consequential among the social and environmental dimensions of CSR. Our study demonstrates that CEOs are judged on their companies' social reputation in the director labor market. Our results also suggest that social reputation plays an important role in promoting CSR.

Keywords: social reputation, stakeholders, corporate social responsibility (CSR), director labor market, CEO, outside directorship, ESG

JEL Classification: G30, G34, J40, M14

Suggested Citation

Cai, Xiangshang and Gao, Ning and Garrett, Ian and Xu, Yan, Are CEOs Judged on Their Companies' Social Reputation? (April 8, 2020). Journal of Corporate Finance, 64, Oct. 2020. (DOI: https://doi.org/10.1016/j.jcorpfin.2020.101621), Available at SSRN: https://ssrn.com/abstract=3571330

Xiangshang Cai

University of Essex - Essex Business School ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

Ning Gao (Contact Author)

Manchester Accounting and Finance Group, Alliance Manchester Business School, University of Manchester ( email )

Booth Street East
.
Manchester, M13 9SS
United Kingdom

HOME PAGE: http://www.research.manchester.ac.uk/portal/Ning.Gao.html

Ian Garrett

Manchester Business School ( email )

Manchester
United Kingdom

Yan Xu

University of Manchester - Alliance Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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