Corporate Social Responsibility and Insider Horizon
56 Pages Posted: 9 Feb 2022 Last revised: 25 Apr 2022
Date Written: April 23, 2022
Insiders, including directors and managers, are instrumental in establishing corporate strategy and steering a firm’s direction. We document a positive relation between insider horizon and firms’ corporate social responsibility (CSR) performance. This positive relation is likely driven by good internal governance rather than agency problems. We adopt the enactment of antitakeover laws and the Inevitable Disclosure Doctrine as shocks to support a causal interpretation. We find that positive effects are stronger when firms have higher ownership of long-term institutional investors and when insiders sign long-term compensation contracts. Finally, we document the real effects by using various raw CSR metrics.
Keywords: CSR, insider investment horizon, short-termism, corporate governance
JEL Classification: G14, G23, G32, M14
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