CEO Materialism and Corporate Social Responsibility

Abstract

We study the role of individual CEOs in explaining corporate social responsibility (CSR) scores. We find that CEO fixed effects explain 59 percent of the variation in CSR scores, whereas firm fixed effects explain 23 percent of the variation in CSR scores. Specifically, firms led by materialistic CEOs have lower CSR scores, fewer strengths, and more weaknesses. Finally, we document that CSR scores in firms with non-materialistic CEOs are positively associated with accounting and stock price performance. In contrast, CSR scores in firms with materialistic CEOs are unrelated to profitability. JEL Classifications: G30; G34; G38.

The role of business strategy and CEO compensation structure in driving corporate social responsibility: Linkage towards a sustainable development perspective

“…A number of strategy scholars indicate that corporate social responsibility (hereinafter CSR) can serve as a complementary measure of firm performance, and it is gaining empirical support as a useful predictor of the ability of firms to develop long-term sustainability (Ahmed, Islam, Mahtab, & Hasan, 2014;Chakrabarty & Wang, 2012;Kacperczyk, 2009;Lopez, Garcia, & Rodriguez, 2007;Ogden & Watson, 1999). Although CSR has become one of the central issues for many organizations, most prior empirical studies examine the relationship between CSR and firm performance (Al-Tuwaijri, Christen, & Hughes, 2004;Wang, Chen, Yu, & Hsiao, 2015) or the role of individual executives, such as CEO narcissism (Petrenko, Aime, Ridge, & Hill, 2016) and CEO materialism (Davidson, Dey, & Smith, 2019), in shaping CSR strategies. Despite this heightened interest in CSR in general, there are very few studies on the association between CSR and business strategy.…”

Lie of the weak: Inconsistent corporate social responsibility activities of Chinese zombie firms

“…Second, CSR is a long-term strategy that helps companies establishing sustainable competitive advantages, while with uncertainty (Adegbite et al, 2019;Liao, P.-C. et al, 2018;McWilliams et al, 2006;Nazeer, 2011;Porter and Kramer, 2006). The long-term strategy, such as CSR activities, is determined by the management team that includes the board of directors and senior executives (Davidson et al, 2018). Zombie firms are standing on the edge of bankruptcy.…”

“…As a result, companies with more employees are more likely to get governmental support, and more likely to become zombie firms. CSR activities are major decisions made by a small number of core figures, such as the board of directors and senior executives (Davidson et al, 2018), after careful consideration of the power of stakeholders. Most grassroots employees are unable to participate in or to influence the CSR decisions.…”

Social Capital, Community Engagement, and Corporate Social Responsibility

“…There are studies now that deem CSR initiatives as an approach to mitigate assault on the "capitalist system is under siege" while "creating shared value" that benefits both firms and society (Porter and Kramer 2011), in addition to intentional investments in stakeholder relations (Freeman et al 2018). Its significance can be gauged by the fact that the annual expenditure by Fortune 500 firms on corporate philanthropy exceeded $15 billion; combined with time and money spent on other CSR projects, the sum of corporate investment is "countless" (Davidson et al 2018). Firms use CSR as a form of differentiation strategy, as reputational capital, to obtain legitimacy, to signal quality and honesty (Porter and Kramer 2006).…”