Journal of Business Ethics

, Volume 57, Issue 3, pp 241–253

Corporate Social Responsibility and Long-term Compensation: Evidence from Canada

Authors

    • Department of Accounting and FinanceEastern Michigan University
  • Linda Thorne
    • Department of Accounting and FinanceEastern Michigan University
Article

DOI: 10.1007/s10551-004-5367-z

Cite this article as:
Mahoney, L.S. & Thorne, L. J Bus Ethics (2005) 57: 241. doi:10.1007/s10551-004-5367-z

Abstract.

This paper examines the association between long-term compensation and corporate social responsibility (CSR) for 90 publicly traded Canadian firms. Social responsibility is considered to include concerns for social factors and the environment (e.g. Johnson, R. and D. Greening: 1999, Academy of Management Journal 42(5), 564-578; Kane, E. J. (2002, Journal of Banking and Finance 26:, 1919-1933; McGuire, J. et al. 2003, Journal of Business Ethics 45 (4), 341-359). Long-term compensation attempts to focus executives’ efforts on optimizing the longer term, which should direct their attention to factors traditionally associated with socially responsible executives (Mahapatra, S. 1984, Journal of Financial Economicsit 20, 347-376). As hypothesized, we found a significant relationship between the long-term compensation and total CSR weakness as well as the product/environmental weakness dimension of CSR. In addition, we found a marginally significant relationship between long-term compensation and total corporate responsibility. Our findings are that executives’ long-term compensation is associated with a firm’s environmental actions, and that firms that utilize long-term compensation are more likely to mitigate product/environment weaknesses than those that do not. Implications for practice and research are discussed.

Keywords

corporate governanceexecutive compensationsocial performancesocial responsibility

Copyright information

© Springer 2005