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CEO's Incentive to Manage Reputation and Corporate Social Responsibility(CSR): Evidence from Korea

  • Journal of Insurance and Finance
  • 2015, 26(1), pp.73-108
  • Publisher : Korea Insurance Research Institute
  • Research Area : Social Science > Business Management

Kang, Sang Koo 1 임현일 1

1고려대학교

Accredited

ABSTRACT

CEO has incentive to manage their reputation from either private benefits of control or career concern. We examine whether CEO's incentive to manage their reputation can affect CSR activity of the firm they manage. Further, we explore the effect of CSR, driven by such incentive, on firm value and short-term performance. Using Korean companies from 2005 to 2010, we find significantly positive relation between CEO's incentive to manage their reputation and CSR activities after controlling governance and firm characteristic variables. Non-family CEO, with greater incentive for reputation management, significantly increases the CSR activities more. Further, we find that CSR does not increase firm value when CSR is made by non-family CEO with greater incentive for reputation management. Even worse, these incentive driven CSR significantly decreases firm value. We interpret the result that CSR activities could be exploited as a means to improve CEO's reputation, when the CEO has larger incentive to manage their reputation.

Citation status

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