Abstract
We use CEO wealth sensitivity to stock performance (delta) and stock volatility (vega) to provide empirical evidence that supports the conclusion that CEO compensation structure influences firm Corporate Social Responsibility (CSR). We find that CEOs are uncertain about the viability of CSR investments from a profit perspective, but that they are confident that CSR initiatives increase firm risk. We quantify firms' CSR ratings using the Kinder Lydenberg Domini ratings system and compute measures of delta and vega in accordance with previous studies. Using panel data spanning 1995-2010 , we estimate a fixed effects model to determine the relationship between delta, vega and firm CSR rating. We find that delta has no significant effect on CSR rating, while vega has a strong causal relation with CSR.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
