Prosocial CEOs, Corporate Policies, and Firm Value

Review of Accounting Studies, Forthcoming

66 Pages Posted: 20 Oct 2020 Last revised: 11 Jan 2023

See all articles by Mei Feng

Mei Feng

University of Pittsburgh - Katz Graduate School of Business

Weili Ge

University of Washington - Michael G. Foster School of Business

Zhejia Ling

California State University, Fullerton

Wei Ting Loh

University of Washington - Michael G. Foster School of Business; Singapore Management University - School of Accountancy

Date Written: January 2, 2023

Abstract

This paper examines how chief executive officers’ (CEOs’) prosocial tendency influences corporate policies and firm value. We use individuals’ involvement with charitable organizations as a proxy for prosocial tendency. We find that, compared to firms with non-prosocial CEOs, firms with prosocial CEOs have lower executive subordinate turnover, implement more employee-friendly policies, experience higher customer satisfaction, and engage in more socially responsible activities. We also find that firms with prosocial CEOs have higher firm value and lower firm risk, partly due to the corporate policies adopted by prosocial CEOs. These results are corroborated when we compare changes in corporate policies and firm value around different types of CEO turnovers: a prosocial CEO replacing a non-prosocial CEO versus other types. Our results thus suggest that prosocial CEOs are more likely to make corporate decisions that benefit others and increase firm value.

Keywords: Prosocial tendency; Corporate policies; Employee turnover; Customer satisfaction; Corporate social responsibility; Firm value.

JEL Classification: D64, G40, G41, M14

Suggested Citation

Feng, Mei and Ge, Weili and Ling, Zhejia and Loh, Wei Ting, Prosocial CEOs, Corporate Policies, and Firm Value (January 2, 2023). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3685522 or http://dx.doi.org/10.2139/ssrn.3685522

Mei Feng

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Weili Ge (Contact Author)

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Zhejia Ling

California State University, Fullerton ( email )

School of Accountancy
College of Business and Economic
Fullerton, CA California 92834
United States

Wei Ting Loh

University of Washington - Michael G. Foster School of Business ( email )

Box 353200
Seattle, WA 98195-3200
United States

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

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