Corporate Social Performance and the Managerial Labor Market

Review of Accounting Studies (Forthcoming)

Posted: 13 Sep 2021

See all articles by Xin Dai

Xin Dai

Drexel University

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business

Ivy Zhang

University of California, Riverside

Date Written: September 2021

Abstract

This paper examines the impact of a firm’s social performance on the CEO’s employment prospects. We find that CEOs are more (less) likely to leave office when there is a significant recent decline (improvement) in social performance. We then track departing CEOs’ subsequent employment records and find that the social performance of their previous employers improves their labor market outcomes. These CEOs are more likely to find a new executive position, move up to a larger public firm, and receive higher compensation from the new public firm. Using a Cox proportional hazard model, we find that the strong social performance of the previous employer helps CEOs find their next executive positions sooner. Overall, our results suggest that corporate social performance enhances CEOs’ labor market potentials.

Keywords: Managerial labor market, Corporate social responsibility (CSR), Environmental, social, and governance (ESG), CEO turnover

JEL Classification: M40, J01, M14

Suggested Citation

Dai, Xin and Gao, Feng and Lisic, Ling Lei and Zhang, Ivy, Corporate Social Performance and the Managerial Labor Market (September 2021). Review of Accounting Studies (Forthcoming), Available at SSRN: https://ssrn.com/abstract=3920589

Xin Dai

Drexel University ( email )

3141 Chestnut St
Philadelphia, PA 19104
United States

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Ling Lei Lisic

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

3007 Pamplin Hall
Blacksburg, VA 24061
United States

Ivy Zhang (Contact Author)

University of California, Riverside ( email )

900 University Ave
Riverside, CA 92521
United States

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