Research Output
The sensitivity of corporate social performance to corporate financial performance: A “time-based” agency theory perspective
  This study focuses on micro-level phenomena and time issues that have been traditionally neglected in both corporate governance and corporate social responsibility research. Drawing on agency theory concerning time-based managerial incentives (i.e. short term and long term), we investigate which managerial incentives for compensation drive the sensitivity of corporate social performance (CSP) to corporate financial performance (CFP). Using data for publicly listed Korean firms, we found a significant and positive relationship between CSP and CFP, with this relationship strengthened in firms with high managerial ownership but insignificant in those with high earnings-based compensation. Furthermore, we found that the interaction effects of CSP and high earnings-based compensation on CFP become positive in firms with high managerial ownership, indicating that the sensitivity between CSP and CFP is driven by long-term managerial incentives.

  • Type:

    Article

  • Date:

    31 May 2020

  • Publication Status:

    Published

  • Publisher

    SAGE Publications

  • DOI:

    10.1177/0312896220917192

  • ISSN:

    0312-8962

  • Funders:

    Soonchunhyang University Research Fund

Citation

Park, B., & Lee, K. (2021). The sensitivity of corporate social performance to corporate financial performance: A “time-based” agency theory perspective. Australian Journal of Management, 46(2), 224-247. https://doi.org/10.1177/0312896220917192

Authors

Keywords

Agency theory, corporate financial performance, corporate social performance, corporate social responsibility, managerial incentives

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