Entrenchment through corporate social responsibility: Evidence from CEO network centrality

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Title: Entrenchment through corporate social responsibility: Evidence from CEO network centrality
Author: Chahine, Salim ; Fang, Yiwei ; Hasan, Iftekhar ; Mazboudi, Mohamad
Series: International Review of Financial Analysis
Series volume: 66
Series number: November ; 2019
Year of publication: 2019
Publication date: 26.4.2019
DOI: https://doi.org/10.1016/j.irfa.2019.04.010
Keywords: yritykset; vastuu; hyvä hallintotapa; sosiaalinen vastuu; toimitusjohtajat
JEL: D85; L14; M14
Other keywords: Corporate social responsibility; Network centrality; Corporate governance; Firm value; CEO compensation
Abstract: This paper investigates whether CEOs with high network centrality entrench themselves when taking CSR decisions and how that affects firm value. Evidence portrays that CSR in firms with more central CEOs is negatively associated with firm-value, and this association is mitigated by better corporate governance mechanisms and by geographic areas of higher social capital. This negative association is lower during disasters which reflect periods of positive exogenous shocks to the societal demand for CSR. Furthermore, CSR by more central CEOs is positively associated with future increases in CEO compensation and future improvement in a CEO's network position. The findings reveal that, in general, central CEOs use CSR to entrench themselves and gain private benefits rather than increase shareholder value.


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