The sensitivity of corporate social performance to corporate financial performance: A 'time-based' agency theory perspective

摘要

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.JEL Classification: M12, M14, G35.