TITLE:
The Impact of Corporate Social Responsibility on Executive Compensation
AUTHORS:
Rim Ben Hassen, Sana Ghardadou
KEYWORDS:
Corporate Social Responsibility, Pay-For-Performance
JOURNAL NAME:
Open Access Library Journal,
Vol.7 No.8,
August
11,
2020
ABSTRACT:
The following research examines the impact of CSR on executive compensation based on the level of performance of the company by using total CSR, environmental CSR and economic CSR. An empirical study carried out on a sample of French companies over the period 2007-2016 revealed a positive and significant relationship between Pay-for-performance sensitivity and executive compensation. This result is in line with agency theory, which assumes that executives are encouraged to over-invest in CSR activities, in order to eventually improve their reputation to the detriment of shareholders. The overinvestment assumption in corporate social responsibility activities can lead to a deterioration in the value of the firm as it enhances the reputation of the responsible officer, which allows the officer to increase his bargaining power, market value and prospect careers.