CEO power and corporate social responsibility decoupling

ABSTRACT

While extending the scarce literature on determinants of corporate social responsibility (CSR) decoupling, we examine the impact of CEO power on CSR decoupling. Using panel data of US firms for 2002–2017, we find that CEO power increases CSR decoupling. Our results remain consistent after controlling for the endogeneity problem. Aligned with the managerial power theory, our results suggest that firms with powerful CEOs are more likely to manage CSR performance through decoupling.

KEYWORDS:

• CEO power
• CEO pay slice
• corporate social responsibility (CSR)
• CSR decoupling

JEL CLASSIFICATION:

• G34
• M14
• M52
• Q56

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ Such partial, selective, or prejudiced reporting is possible as CSR disclosure practices are voluntary and largely unregulated in the US (García-Sánchez et al. 2020).

² Alternatively, García-Sánchez et al. (2020) measure CSR decoupling as the gap between CSR reporting and performance. Likewise, we operationalize alternative proxy of CSR decoupling as the difference between current year’s Bloomberg CSR disclosure score and one year lagged Assets 4 CSR performance score scaled by the logged total assets.

³ To ensure the robustness of reported findings, we replace our main measure of CSR decoupling with alternative proxy of CSR decoupling and re-estimate Equation (1)(1) $CSR\mathrm{\_}GA{P}_{it}={\beta }_0+{\beta }_1{\left(CPS\right)}_{it}+{\beta }_n{\left(Controls\right)}_{it}+{\epsilon }_{it}$(1) . The unreported results shows that CEO power is still positively and significantly associated with CSR decoupling.