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CEO Pay Slice and Firm Value: Is Corporate Social Responsibility a Missing Link?
The topic of pay disparity in the upper echelons has attracted the frequent attention of scholars. We propose that CEO Pay Slice (CPS) is associated with differential levels of investment in internally and externally–focused corporate social responsibility (CSR) initiatives, which can impact firm value. Results derived from a longitudinal sample of U.S.–based public firms provides support for a partial mediation model, where internal CSR, but not external CSR, mediates the negative relationship between CPS and firm value. Notably, we adopted an instrumental variable approach to address endogeneity concerns. Findings remain consistent across various analytical specifications and econometric techniques.