CSR contracting and stock price crash risk: International evidence

IF 5.4 2区 经济学 Q1 BUSINESS, FINANCE Journal of International Financial Markets Institutions & Money Pub Date : 2024-04-14 DOI:10.1016/j.intfin.2024.101999
Simeng Liu , Kun Tracy Wang , Sonali Walpola , Nathan Zhenghang Zhu
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Abstract

In this study, we examine whether and how the worldwide integration of corporate social responsibility (CSR) criteria into executive compensation contracts (hereafter, CSR contracting or CSR-based executive compensation) affects a firm’s stock price crash risk. Using a comprehensive sample of 42,049 firm-year observations from 53 countries from 2003 to 2019, we find that CSR contracting firms have greater stock price crash risk. This positive association can be attributed to exacerbated managerial bad news hoarding behavior and overinvestment. We further demonstrate that the positive relationship between CSR contracting and crash risk is more pronounced for firms with powerful CEOs, as well as in countries with inferior investor protection and disclosure transparency. Overall, our findings are consistent with the agency cost and managerial power perspective, suggesting that CSR contracting may be exploited by powerful and opportunistic managers as a means of diverting shareholders’ attention and concealing bad financial news. Our findings have implications for both researchers and business practitioners.

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企业社会责任契约与股价暴跌风险:国际证据
在本研究中,我们考察了在全球范围内将企业社会责任(CSR)标准纳入高管薪酬合同(以下简称 CSR 合同或基于 CSR 的高管薪酬)是否以及如何影响公司的股价暴跌风险。通过对 2003 年至 2019 年 53 个国家的 42,049 个公司年度观测数据进行综合抽样,我们发现,签订企业社会责任合同的公司具有更大的股价暴跌风险。这种正相关关系可归因于管理者囤积坏消息行为和过度投资的加剧。我们进一步证明,企业社会责任契约与股价暴跌风险之间的正相关关系在首席执行官强势的公司以及投资者保护和信息披露透明度较低的国家更为明显。总体而言,我们的研究结果符合代理成本和管理权力的观点,表明企业社会责任契约可能会被有权势和机会主义的管理者利用,作为转移股东注意力和掩盖财务坏消息的一种手段。我们的研究结果对研究人员和商业从业者都有启示意义。
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来源期刊
CiteScore
6.60
自引率
10.00%
发文量
142
期刊介绍: International trade, financing and investments, and the related cash and credit transactions, have grown at an extremely rapid pace in recent years. The international monetary system has continued to evolve to accommodate the need for foreign-currency denominated transactions and in the process has provided opportunities for its ongoing observation and study. The purpose of the Journal of International Financial Markets, Institutions & Money is to publish rigorous, original articles dealing with the international aspects of financial markets, institutions and money. Theoretical/conceptual and empirical papers providing meaningful insights into the subject areas will be considered. The following topic areas, although not exhaustive, are representative of the coverage in this Journal. • International financial markets • International securities markets • Foreign exchange markets • Eurocurrency markets • International syndications • Term structures of Eurocurrency rates • Determination of exchange rates • Information, speculation and parity • Forward rates and swaps • International payment mechanisms • International commercial banking; • International investment banking • Central bank intervention • International monetary systems • Balance of payments.
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