The sensitivity of corporate social performance to corporate financial performance: A "time-based" agency theory perspective
Author(s)
Park, Bum-Jin
Lee, Ki-Hoon
Griffith University Author(s)
Year published
2020
Metadata
Show full item recordAbstract
This study focuses on micro-level phenomena and time issues that have been traditionally neglected in both corporate governance and corporate social responsibility research. Drawing on agency theory concerning time-based managerial incentives (i.e. short term and long term), we investigate which managerial incentives for compensation drive the sensitivity of corporate social performance (CSP) to corporate financial performance (CFP). Using data for publicly listed Korean firms, we found a significant and positive relationship between CSP and CFP, with this relationship strengthened in firms with high managerial ownership but ...
View more >This study focuses on micro-level phenomena and time issues that have been traditionally neglected in both corporate governance and corporate social responsibility research. Drawing on agency theory concerning time-based managerial incentives (i.e. short term and long term), we investigate which managerial incentives for compensation drive the sensitivity of corporate social performance (CSP) to corporate financial performance (CFP). Using data for publicly listed Korean firms, we found a significant and positive relationship between CSP and CFP, with this relationship strengthened in firms with high managerial ownership but insignificant in those with high earnings-based compensation. Furthermore, we found that the interaction effects of CSP and high earnings-based compensation on CFP become positive in firms with high managerial ownership, indicating that the sensitivity between CSP and CFP is driven by long-term managerial incentives. JEL Classification: M12, M14, G35.
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View more >This study focuses on micro-level phenomena and time issues that have been traditionally neglected in both corporate governance and corporate social responsibility research. Drawing on agency theory concerning time-based managerial incentives (i.e. short term and long term), we investigate which managerial incentives for compensation drive the sensitivity of corporate social performance (CSP) to corporate financial performance (CFP). Using data for publicly listed Korean firms, we found a significant and positive relationship between CSP and CFP, with this relationship strengthened in firms with high managerial ownership but insignificant in those with high earnings-based compensation. Furthermore, we found that the interaction effects of CSP and high earnings-based compensation on CFP become positive in firms with high managerial ownership, indicating that the sensitivity between CSP and CFP is driven by long-term managerial incentives. JEL Classification: M12, M14, G35.
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Journal Title
Australian Journal of Management
Note
This publication has been entered in Griffith Research Online as an advanced online version.
Subject
Commerce, Management, Tourism and Services
Social Sciences
Business & Economics
Agency theory