Executive Compensation and Impression Management Behavior of Corporate Social Responsibility Report

Abstract

Corporate social responsibility report is an important carrier for a company to transmit social responsibility information to investors, government departments, the public and other stakeholders. The corporate social responsibility report has the characteristics of many narratives, strong subjectivity, large control space and imperfect disclosure standards, which provides the possibility for company executives to implement impression management. Impression management refers that information providers manipulate information content and form when they disclose information to stakeholders, with the purpose to influence the evaluation of stakeholders. The impression management behavior of social responsibility report can not only intervene the cognition and decision-making of stakeholders, but also affect the efficiency of resource allocation in the capital market. With the continuous development of economy and society, the polarization of income distribution is becoming more and more serious. The executive compensation of the company has attracted the attention of the government, the media and the public, and also been questioned. In order to reduce the public’s unfair perception of high compensation, company executives tend to implement impression management on the company’s annual report. Based on the data of China’s A-share listed companies from 2014 to 2018, this paper evaluates the impression management behavior by constructing two-dimensional quantitative indicators of modifying manipulation and readability manipulation, and explores the relationship between executive compensation and impression management behavior. The results show that: The impression management behavior is common in China’s listed companies. The higher the executive compensation, the more significant the impression management behavior; the positive relationship between executive compensation and impression management behavior is more significant in state-owned listed companies and heavily polluted listed companies; accounting conservatism suppresses the positive relationship between executive compensation and impression management behavior. Previous literature only evaluates from a single dimension, with few data samples. After using the new evaluation method, this paper extends the relevant research to the listed companies across five accounting years, with a total of 2200 samples, which provides technical support for the further study of corporate impression management, and also makes the research conclusions more universal.