À繫¿¬±¸ Á¦ ±Ç È£ (2020³â 11¿ù)
Asian Review of Financial Research, Vol., No..
pp.771~850
pp.771~850
Stakeholder Orientation and the Alignment of CEO and Shareholders Wealth
Kyumin Cho School of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291, Daehak-ro, Yuseong-gu, Daejeon, Republic of Korea
Hyeong Joon Kim School of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291, Daehak-ro, Yuseong-gu, Daejeon, Republic of Korea
Seongjae Mun School of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291, Daehak-ro, Yuseong-gu, Daejeon, Republic of Korea
Seung Hun Han School of Business and Technology Management, Korea Advanced Institute of Science and Technology, 291, Daehak-ro, Yuseong-gu, Daejeon, Republic of Korea
We investigate whether the alignment of chief executive officer (CEO) and shareholders wealth influences decisions on engaging in stakeholder-oriented activities. CEOs maximizing their own utility are more likely to engage in such activities when they are not strongly aligned with shareholders wealth. Empirically, firms with CEOs whose wealth is more sensitive to the firm value are less likely to engage in external activities (communities, environments, and human rights). We find that this negative effect is mitigated after the conflict of interests between shareholders and stakeholders is reduced by the constituency statutes. Furthermore, after an exogenous reduction in the alignment of CEO and shareholders wealth, we find that firms that were prone to overinvestment before this exogenous reduction are more likely to engage stakeholder-oriented activities. Overall, our analysis suggests that strong alignment of CEO and shareholders wealth effectively prevents overinvestment in stakeholderoriented activities that might be motivated by agency problems.
Kyumin Cho
Hyeong Joon Kim
Seongjae Mun
Seung Hun Han
We investigate whether the alignment of chief executive officer (CEO) and shareholders wealth influences decisions on engaging in stakeholder-oriented activities. CEOs maximizing their own utility are more likely to engage in such activities when they are not strongly aligned with shareholders wealth. Empirically, firms with CEOs whose wealth is more sensitive to the firm value are less likely to engage in external activities (communities, environments, and human rights). We find that this negative effect is mitigated after the conflict of interests between shareholders and stakeholders is reduced by the constituency statutes. Furthermore, after an exogenous reduction in the alignment of CEO and shareholders wealth, we find that firms that were prone to overinvestment before this exogenous reduction are more likely to engage stakeholder-oriented activities. Overall, our analysis suggests that strong alignment of CEO and shareholders wealth effectively prevents overinvestment in stakeholderoriented activities that might be motivated by agency problems.
Stakeholder orientation,Corporate social responsibility,Risk-aversion,Agency problem