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Eastern Academy of Management International 2019 Conference

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CEO Pay Slice and Firm Value: Is Corporate Social Responsibility a Missing Link?

Prachi Gala
Elon University  |  United States
pgala@elon.edu

Vishal Gupta
The University of Alabama  |  United States
vkgupta@cba.ua.edu

Daniel Bacharach
The University of Alabama  |  United States
dbachrac@cba.ua.edu

Sandra Mortal
The University of Alabama  |  United States
scmortal@cba.ua.edu

Xiaohu Guo
The University of Alabama  |  United States
xguo19@crimson.ua.edu


Keywords: CEO Pay Slice, pay disparity, internal CSR, external CSR, mediation, firm value


Abstract: 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.

 


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