Corporate Social Responsibility and Insider Horizon

65 Pages Posted: 9 Feb 2022 Last revised: 6 Nov 2023

See all articles by Mark B. Shackleton

Mark B. Shackleton

Lancaster University - Department of Accounting and Finance

Chelsea Yaqiong Yao

Lancaster University - Lancaster University Management School; New York University (NYU) - Leonard N. Stern School of Business

Ziran Zuo

Lancaster University - Department of Accounting and Finance

Date Written: November 1, 2023

Abstract

Insiders, including directors and managers, are instrumental in establishing corporate strategy and steering a firm’s direction. Our findings show a positive relation between insider horizon and a firm’s corporate social responsibility (CSR) performance. This positive relation is likely driven by good internal governance rather than agency problems. To support a causal interpretation, we adopt managerial career horizon reductions and the rejection of inevitable disclosure doctrine as exogenous shocks to insider horizon. We find that the observed positive effects are stronger when firms have higher ownership of long-term and socially responsible institutional investors, when insiders sign long-term compensation contracts, and when firms face less takeover pressure. We document the real effects of long-horizon insiders using various raw CSR metrics. Overall, our results indicate that insiders’ long-term orientation can promote CSR.

Keywords: CSR, insider investment horizon, short-termism, corporate governance

JEL Classification: G14, G23, G32, M14

Suggested Citation

Shackleton, Mark B. and Yao, Yaqiong and Zuo, Ziran, Corporate Social Responsibility and Insider Horizon (November 1, 2023). Available at SSRN: https://ssrn.com/abstract=3995694 or http://dx.doi.org/10.2139/ssrn.3995694

Mark B. Shackleton

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Lancaster LA1 4YX
United Kingdom
44 1524 594131 (Phone)
44 1524 847321 (Fax)

Yaqiong Yao (Contact Author)

Lancaster University - Lancaster University Management School ( email )

Department of Accounting and Finance
Lancaster University Management School
Lancaster, LA1 4YX
United Kingdom

HOME PAGE: http://www.chelseayao.com

New York University (NYU) - Leonard N. Stern School of Business ( email )

Stern School of Business
44 West 4th Street
New York, NY NY 10012
United States

Ziran Zuo

Lancaster University - Department of Accounting and Finance ( email )

The Management School
Lancaster LA1 4YX
United Kingdom

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