Do sustainable institutional investors influence senior executive compensation structures according to their preferences? Empirical evidence from Europe
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In: Corporate Social Responsibility and Environmental Management, Vol. 29, No. 5, 01.09.2022, p. 1109-1121.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Do sustainable institutional investors influence senior executive compensation structures according to their preferences? Empirical evidence from Europe
AU - Focke, Maximilian
N1 - © 2022 The Author. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd.
PY - 2022/9/1
Y1 - 2022/9/1
N2 - This paper examines whether sustainable institutional investors promote corporate social responsibility (CSR)-contingent components (e.g., environmental or social aspects) in senior executive compensation in order to align top management interests in the promotion of sustainability with their own. Empirical analyses of a sample of 5979 firm-year observations from European firms over the 2010–2017 period showed that the presence of sustainable institutional investors positively predicts the likelihood of firms offering CSR-contingent compensation contracts. This paper significantly contributes to prior empirical research, which predominantly focuses on the effectiveness of CSR-contingent components within compensation structures. Sustainable institutional investors as a potential driver of CSR-contingent components have not yet been examined. We specifically investigate institutional investors that have either a substantial or a time-dependent belief in CSR. Our results indicate that sustainable institutional investors represent a central external corporate governance mechanism and tend to align top management preferences with their own via compensation structures.
AB - This paper examines whether sustainable institutional investors promote corporate social responsibility (CSR)-contingent components (e.g., environmental or social aspects) in senior executive compensation in order to align top management interests in the promotion of sustainability with their own. Empirical analyses of a sample of 5979 firm-year observations from European firms over the 2010–2017 period showed that the presence of sustainable institutional investors positively predicts the likelihood of firms offering CSR-contingent compensation contracts. This paper significantly contributes to prior empirical research, which predominantly focuses on the effectiveness of CSR-contingent components within compensation structures. Sustainable institutional investors as a potential driver of CSR-contingent components have not yet been examined. We specifically investigate institutional investors that have either a substantial or a time-dependent belief in CSR. Our results indicate that sustainable institutional investors represent a central external corporate governance mechanism and tend to align top management preferences with their own via compensation structures.
KW - corporate governance
KW - corporate social responsibility
KW - institutional investors
KW - ownership structure
KW - sustainable finance
KW - sustainable management compensation
KW - Management studies
UR - http://www.scopus.com/inward/record.url?scp=85125039738&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/1a1e766b-662b-3e90-bddf-85841ab85d31/
U2 - 10.1002/csr.2257
DO - 10.1002/csr.2257
M3 - Journal articles
AN - SCOPUS:85125039738
VL - 29
SP - 1109
EP - 1121
JO - Corporate Social Responsibility and Environmental Management
JF - Corporate Social Responsibility and Environmental Management
SN - 1535-3958
IS - 5
ER -