CEO tenure and corporate social responsibility performance

Abstract

In this study, we examine whether and how CEO tenure affects firms' corporate social responsibility (CSR) performance. Using a sample of U.S. firms for the 1999–2013 period, we find that firms' CSR performance is significantly higher in CEOs' early tenure than in their later tenure. We also find that the relationship between CEO tenure and CSR performance is stronger when the board is more independent and CEOs have a longer expected employment period, supporting both the signaling interpretation of the career concern hypothesis and the career horizon hypothesis. Consistent with the trend of increasing awareness of the importance of CSR, we find that the relationship between CEO tenure and CSR performance has become more significant in recent years. Finally, we show that better CSR performance in a CEO's early tenure is associated with a lower CEO turnover probability, suggesting that commitment to CSR during CEOs' early tenure could enable them to mitigate career concerns.