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General managerial skills and corporate social responsibility

General managerial skills and corporate social responsibility
General managerial skills and corporate social responsibility
We show that a CEO’s general managerial skills are negatively related to the level of corporate social responsibility (CSR) undertaken by the firm. This finding is robust to alternative measures of CSR and alternative econometric specifications. The negative effect of general managerial skills on CSR persists when we attempt to address potential endogeneity concerns by employing propensity score matching and an instrumental variables approach. Further, supplementary analysis reveals that this negative effect is stronger in tight labor markets and in firms where shareholders are more short term oriented, consistent with the notion that the broader set of outside options available to generalist chief executive officers acts as a labor market mechanism that makes them less concerned about the firm’s long-term prosperity and thus more reluctant to commit to CSR.
Corporate social responsibility, General human capital, Market for executives
0927-5398
43-59
Chen, Jie
7181526d-ec25-480e-a35e-37bf4616e131
Liu, Xicheng
a836019a-35b8-48cd-ae71-64afc70b114d
Song, Wei
0d91b8a3-694b-469e-a15e-bba82dc5d090
Zhou, Si
e9ae0607-1ac6-47ca-a917-7bfd57505fd3
Chen, Jie
7181526d-ec25-480e-a35e-37bf4616e131
Liu, Xicheng
a836019a-35b8-48cd-ae71-64afc70b114d
Song, Wei
0d91b8a3-694b-469e-a15e-bba82dc5d090
Zhou, Si
e9ae0607-1ac6-47ca-a917-7bfd57505fd3

Chen, Jie, Liu, Xicheng, Song, Wei and Zhou, Si (2020) General managerial skills and corporate social responsibility. Journal of Empirical Finance, 55, 43-59. (doi:10.1016/j.jempfin.2019.10.007).

Record type: Article

Abstract

We show that a CEO’s general managerial skills are negatively related to the level of corporate social responsibility (CSR) undertaken by the firm. This finding is robust to alternative measures of CSR and alternative econometric specifications. The negative effect of general managerial skills on CSR persists when we attempt to address potential endogeneity concerns by employing propensity score matching and an instrumental variables approach. Further, supplementary analysis reveals that this negative effect is stronger in tight labor markets and in firms where shareholders are more short term oriented, consistent with the notion that the broader set of outside options available to generalist chief executive officers acts as a labor market mechanism that makes them less concerned about the firm’s long-term prosperity and thus more reluctant to commit to CSR.

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Accepted/In Press date: 5 November 2019
e-pub ahead of print date: 5 November 2019
Published date: 2020
Keywords: Corporate social responsibility, General human capital, Market for executives

Identifiers

Local EPrints ID: 435664
URI: http://eprints.soton.ac.uk/id/eprint/435664
ISSN: 0927-5398
PURE UUID: ead56d0f-1ecf-403f-bd7c-e0afb4846b31

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Date deposited: 18 Nov 2019 17:30
Last modified: 28 Apr 2022 04:51

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Contributors

Author: Jie Chen
Author: Xicheng Liu
Author: Wei Song
Author: Si Zhou

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