Archival research on sustainability‐related executive compensation. A literature review of the status quo and future improvements

Abstract

This literature review summarizes previous quantitative archival research on sustainability‐related executive compensation (SREC) as the overarching research method in this field. Based on stakeholder agency theory, we included 66 peer‐reviewed studies on the determinants (governance, financial, and sustainability drivers) and consequences of SREC on firm value (financial and sustainability consequences). Regarding SREC, we differentiated between the Chief Executive Officer (CEO) and the total executive level. Although we note a lower attraction of SREC research on possible determinants, there are clear indications that SREC has a positive effect on sustainability performance. In contrast to the business case argument for sustainability, this is not true for financial performance. We find major limitations and research gaps in previous studies that should be recognized in future studies (e.g., differentiation between symbolic and substantive use of SREC). Our results are mainly important for researchers, business practice and regulatory bodies.