CEO Short-Term Pay, Long-Term Pay, and Corporate Social Responsibility : Does Pay Structure Affect the Focus of CSR? An Empirical Study

Corporate social responsibility has been increasingly regarded as an important firm non-market strategy that impact the overall firm's performance and how its viewed by the society, leading to an intensified research focusing on its antecedents, processes, and outcomes. As the most influential decision makers, I examine the question of whether the structure of CEO pay (long-term pay vs short term pay) provide equal incentives for managers to engage in both dimensions equally. I find that CEO pay structure has different implications on the two dimensions of CSR, namely externally and internally oriented CSR. While the previous assumptions about the relationships between short term pay and CSR and long term and CSR are supported, I find that when I decompose CSR into external and internal CSR, short term pay is negatively related to external CSR and positively related to internal CSR, while long term pay is positively related to both dimensions of CSR. Theoretical and practical implications of these results are provided