Abstract
Although it is widely accepted that corporate social responsibility (CSR) is key to obtaining business sustainability, there is a significant lack of empirical tests on the longer-term benefits of CSR in academic literature. The objective of our study was to examine the effects of chief executive officer (CEO) governance on CSR in service firms. We used CEO pay slice (CPS) to measure CEO governance and the Korea Economic Justice Institute Index (KEJI) to measure the level of CSR activities. CPS was measured using the compensation information of the board of directors in their business reports. The KEJI was obtained from the website of Citizens’ Coalition for Economic Justice. The sample selected from listed firms consisting of 260 observations was collected from 2013 to 2015 at the TS-2000 and the FnGuide. The results showed that the CPS has a significant negative impact on the level of CSR activities in service firms. Specifically, CPS has a significant negative impact on the level of CSR activities in the areas of human, environment, and society at a significant level of one percent. Based on these results, higher CEO governance is expected to mean lower CSR in service firms. This paper contributes to the field of research in that it is the first research on the relationship between CEO governance and the level of CSR activities in service firms.
Highlights
It is widely accepted that corporate social responsibility is key to obtaining business sustainability
This study examines the effect of chief executive officer (CEO) influence on corporate social responsibility activities in service companies
CEO governance in service companies has a negative effect on the overall level of corporate social responsibility (CSR) activities
Summary
It is widely accepted that corporate social responsibility (hereinafter referred to as CSR) is key to obtaining business sustainability. CSR can be defined as activities carried out by a corporation, conducted voluntarily through a process of analyzing and accepting the social and environmental interests of its various stakeholders and actively applying them to the management of the corporation to fulfill the social duties that its stakeholders expect and demand of it [1]. Corporate social responsibility is not an activity that a company reluctantly imposes in response to external pressures or demands, but rather a process of voluntarily planning and implementing beneficial activities to adapt to the ethical standards and social expectations of its stakeholders and consumers. In most countries, businesses are regulated by laws to prevent their activities against the interests of society at large, and firm compliance with these legal requirements is the basis for carrying out corporate social responsibility. Corporate social responsibility goes beyond meeting just these basic legal requirements, to plan and implement additional voluntary CSR activities
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