Business Publications
Document Type
Article
Publication Date
6-2017
Abstract
We use CEO wealth sensitivity to stock performance (delta) and stock volatility (vega) to provide empirical evidence that CEO compensation structure influences firm Corporate Social Responsibility (CSR) ratings. We find that delta has no significant effect on CSR rating, while vega has a strong, causal relationship with CSR. These results suggest that because CEOs view CSR as a way of increasing firm risk rather than improving firm value, they increase their own compensation through vega.
