Charitable CEOs and employee protection

Abstract

In the recent surge of Environmental, Social and Governance (ESG) development, one focus is on human rights protection, while another is continuous strengthening of corporate governance mechanisms. Our study explores these by collecting data on the employee communication from firm corporate social responsibility (CSR) reports and collecting firm practices on employee protection, to examine their association with CEO charitable donations. We posit that a firm with a charitable CEO is likely to have more favorable employee protection policies. Our study of the firm's execution of labor friendly policies and communications shows that charitable CEOs are associated with lower wage inequality, more female workers, higher rate of parental leaves, fewer labor-law violations, better environmental sustainability and better corporate governance. Our results show that CEO behaviors related to empathy increase beneficial treatment of employee and firm's human rights practices.