Does CEO–Audit Committee/Board Interlocking Matter for Corporate Social Responsibility?

Journal of Business Ethics, 2021

52 Pages Posted: 16 Jun 2021

See all articles by Sudipta Bose

Sudipta Bose

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Australia

Muhammad Jahangir Ali

La Trobe University, Department of Accounting, Data Analytics, Economics and Finance

Sarowar Hossain

University of New South Wales (UNSW)

Abul Shamsuddin

University of Newcastle (Australia) - Newcastle Business School

Date Written: June 14, 2021

Abstract

This study examines the impact of the Chief Executive Officer (CEO)’s interlocking, created through serving on other companies’ audit committees and/or boards, on corporate social responsibility (CSR) performance of the focal company (interlocked CEO’s company) and that of its linked companies. We find that CEO interlocking positively affects CSR performance of both the focal company and its linked companies. Further analysis shows that interlocks created by the CEO enhance CSR performance and in turn the financial performance of both the focal company and its linked companies. Our findings are robust to a battery of analyses, including Heckman’s (1979) selection bias correction, propensity score matching (PSM), alternative measures of CSR performance, and CEO interlocks. These findings are important to regulators, company management teams, and other stakeholders with an interest in how the social ties of CEOs influence companies’ CSR performance and in the CSR–financial performance nexus.

Keywords: CSR performance, CEO–audit committee interlocks, CEO–board interlocks, social ties, financial performance

JEL Classification: G34, M14

Suggested Citation

Bose, Sudipta and Ali, Muhammad Jahangir and Hossain, Sarowar and Shamsuddin, Abul, Does CEO–Audit Committee/Board Interlocking Matter for Corporate Social Responsibility? (June 14, 2021). Journal of Business Ethics, 2021, Available at SSRN: https://ssrn.com/abstract=3866584

Sudipta Bose (Contact Author)

Discipline of Accounting and Finance, Newcastle Business School, The University of Newcastle, Australia ( email )

Sydney
Australia

HOME PAGE: http://www.newcastle.edu.au/profile/sudipta-bose

Muhammad Jahangir Ali

La Trobe University, Department of Accounting, Data Analytics, Economics and Finance ( email )

Bundoora
Melbourne, 3086
Australia

Sarowar Hossain

University of New South Wales (UNSW) ( email )

Kensington
High St
Sydney, NSW 2052
Australia

Abul Shamsuddin

University of Newcastle (Australia) - Newcastle Business School ( email )

City Campus East – 231
Callaghan, NSW 2308
Australia

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