Executive Compensation Tied to ESG Performance: International Evidence

Cohen, Shira; Kadach, Igor; Ormazábal, Gaizka; Reichelstein, Stefan

doi:10.2139/ssrn.4237665

Cited by 7 publications

(20 citation statements)

References 3 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Recent studies focus on the motivations of ESG-linked executive compensation contracts. Cohen et al support the argument that firms implement ESG pay to appeal to shareholders and align with stakeholders' preferences; ESG pay adoption is accompanied by corporate pledges to ESG criteria, which signals a commitment to improve ESG outcomes; ESG metrics in executive compensation as well explained as incentive contracting to lower future risk of standard assets because of climate change or geopolitical unrest [19]. Homroy et al also explain that institutional shareholders are exerting pressure for increased transparency and disclosure regarding ESG initiatives [20].…”

Section: Empirical Researchmentioning

confidence: 99%

“…Derrien et al, (2021) conclude that the impact of ESG pay is still unclear currently [47]. Cohen et al do not find that ESG-linked compensation brings about better financial performance, at least in the short run [19]. The specific reason why ESG pay does not play the expected governance effect deserves future study, which has important implications for enterprises to improve ESG executive compensation structure.…”

Section: Corporate Financial Performancementioning

confidence: 99%

“…Companies that combine sustainability strategies with executive compensation enjoy better ESG performance and strengthen their stakeholder relationships [33]. Similarly, Cohen et al conclude that ESG pay adoption is significantly negatively related to carbon emissions [19].…”

Section: Esg Performancementioning

confidence: 99%

See 2 more Smart Citations

Paying Well by Paying for Good? A Review of ESG-Linked Compensation Research

Yin

2024

AEMPS

View full text Add to dashboard Cite

ESG, as values in the global sustainable transformation, drives technology, societal and institutional innovation and its uncertainty influence corporates strategic management and operation activities. Incorporating ESG metrics in executive compensation has become a trend of corporate governance for global companies in recent years. First, this paper theoretically reviews internal and external factors of the ESG-linked compensation incentives, analyses the specific governance mechanism. On this basis, this paper summarises ESG performance and corporate financial performance incurred by ESG pay. Lastly, this paper puts forward future extensive research direction and provides references for subsequent research. Specifically, governance effect by ESG-linked compensation needs to consider institutional feature (developing country and developed country). The consistency between carbon emission policy and economic development determines that ESG performance is limited by the economic development stage and industrial structure of the country. This review contributes to construct analysis framework by Governance Incentives Governance Mechanism Governance Effect to conclude general rule and future research prospect of ESG pay.

show abstract

Section: Empirical Researchmentioning

confidence: 99%

Section: Corporate Financial Performancementioning

confidence: 99%

See 1 more Smart Citation

Paying Well by Paying for Good? A Review of ESG-Linked Compensation Research

Yin

2024

AEMPS

View full text Add to dashboard Cite

show abstract

“…Using a principal‐agent perspective, Cohen et al. (2023) examined the use of ESG metrics in executive compensation in a sample of international publicly traded firms, and linked the reliance on ESG metrics to geographic location, firm fundamentals, and the influence of institutional shareholders. Their findings suggest that the adoption of ESG variables in management performance is correlated with improved ESG performance and with meaningful changes in executive compensation.…”

Section: Theoretical Framework and Prior Literaturementioning

confidence: 99%

Stakeholder influences on management control systems for ESG governance and reporting in the global automotive industry

Yeh,

Xiao,

Daniel

2023

J Corp Accounting Finance

View full text Add to dashboard Cite

Drawing on Simons’ levers of control, we develop a theoretical model to explore the influences of stakeholders (customers, suppliers, employees, regulators, communities, industry associations, and investors) on Management Control Systems for achieving strategic environmental, social, and governance (ESG) objectives. We then test the model using data from over 600 firms in the global automotive industry by linking the eleven largest automotive manufacturers with over 500 of their tier‐1 and tier‐2 suppliers and examining whether stakeholder‐relevant metrics impact supplier retention and whether management compensation is tied to ESG governance. We also examine whether stakeholder influences lead to higher ESG scores. We find that stakeholder‐related metrics for emissions, human rights, customer health, employee empowerment and industry associations are related to management compensation systems tied to ESG. We also find significant linkages between stakeholder influences and ESG scores.

show abstract

“…Cohen et al [2023] document the growing prevalence of executive compensation tied to ESG performance.…”

mentioning

confidence: 99%

How Does Carbon Footprint Information Affect Consumer Choice? A Field Experiment

BEYER,

CHASKEL,

EULER

et al. 2023

J of Accounting Research

View full text Add to dashboard Cite

This paper reports the results of a field experiment investigating how attributes of carbon footprint information affect consumer choice in a large dining facility. Our hypotheses and research methods were pre‐registered via the Journal of Accounting Research’s registration‐based editorial process. Manipulating the measurement units and visualizations of carbon footprint information on food labels, we quantify effects on consumers’ food choices. Treated consumers choose less carbon‐intensive dishes, reducing their food‐related carbon footprint by up to 9.2 %, depending on the treatment. Effects are strongest for carbon footprint information expressed in monetary units (‘environmental costs’) and color‐coded in the familiar traffic‐light scheme. A post‐experimental survey shows that these effects obtain although respondents, on average, self‐report low concern for the environmental footprint of their meal choices. Our study contributes to the accounting literature by using an information processing framework to shed light on the information usage and decision‐making processes of an increasingly important user group of accounting information: consumers.This article is protected by copyright. All rights reserved

show abstract

Executive Compensation Tied to ESG Performance: International Evidence

Cited by 7 publications

References 3 publications

Paying Well by Paying for Good? A Review of ESG-Linked Compensation Research

Paying Well by Paying for Good? A Review of ESG-Linked Compensation Research

Stakeholder influences on management control systems for ESG governance and reporting in the global automotive industry

How Does Carbon Footprint Information Affect Consumer Choice? A Field Experiment

Contact Info

Product

Resources

About