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Board and CEO Political Ideology, CSR Contracting, and CSR Overinvestment

Office of Alumni and External Relations    2021-09-28

Subject: Board and CEO Political Ideology, CSR Contracting, and CSR Overinvestment

Guest: Zhengyu Li, Assistant Professor, Shanghai University of Finance and Economics

Host: Fei Li, Assistant Professor, Antai

Time: Friday, Oct 08, 2021,  13:30-15:00

Venue: Tecent Meeting (Please send email to xuziqing@sjtu.edu.cn for meeting number and password)


Abstract:

We examine the effects of board and CEO political ideologies on the adoption of an increasingly prevalent organizational practice that ties CEO annual compensation contracts to firm corporate social responsibility objectives (“CSR contracting”) and its subsequent effect on firms’ CSR investment. We develop theory to argue that CSR contracting is more likely to be adopted by a firm when (1) its board’s compensation committee is politically liberal-leaning, and (2) the CEO holds a liberal-leaning political ideology. Furthermore, the effect of compensation committee/CEO political liberalism on the adoption of CSR contracting is stronger for early than for late adopters. On the consequence side, we argue that CSR contracting partially mediates the positive relationship between CEO political liberalism and firms’ CSR performance. More important, firms are more likely to overinvest in CSR when liberal-leaning CEOs are CSR contracted. Based on a sample of S&P 500 firms in the U.S. from 2002 to 2013, we find strong support for our theoretical arguments. We discuss our contributions to the literature of CEO compensation and upper echelons and CSR research.

Bio:

Zhengyu Li is an Assistant Professor of Strategy at the College of Business, Shanghai University of Finance and Economics (SUFE). His research interests are in the intersection of organization theory and strategic management. In particular, he is interested in applying the logic of different perspectives from the organization theory, including the upper-echelon perspective, the behavioral theory of the firm, network theory, and the theory on competition and categorization to various topics in strategy research, such as strategic leadership, executive compensation design, corporate governance, reputation and stigma, CSR, and global supply chain. Zhengyu received his Ph.D. from Tilburg University and was a visiting Ph.D. at Ross School of Business, the University of Michigan. He is a Strategy Research Foundation (SRF) Dissertation Scholar of the Strategic Management Society (SMS). His research has received the 2016 AoM Best Paper Award and nominated for the Best Conference Paper award of the 2018 SMS Annual Conference.

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