Corporate social performance and the managerial labor market

Xin Dai, Feng Gao, Ling Lei Lisic, Ivy Xiying Zhang

Review of Accounting Studies · 2023 · Volume 28 · Issue 1

Abstract

This paper examines the impact of a firm’s social performance on the CEO’s employment prospects. We find that CEOs are more (less) likely to leave office when there is a significant recent decline (improvement) in social performance. We then track departing CEOs’ subsequent employment records and find that the social performance of their previous employers improves their labor market outcomes. These CEOs are more likely to find a new executive position, move up to a larger public firm, and receive higher compensation from the new public firm. Using a Cox proportional hazard model, we find that the strong social performance of the previous employer helps CEOs find their next executive positions sooner. Overall, our results suggest that corporate social performance enhances CEOs’ labor market potential.

Keywords

Managerial labor market, Corporate social responsibility (CSR), Environmental, Social, And governance (ESG), CEO turnover

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