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An investigation into the remuneration–CSR nexus and if it can be affected by board gender diversity

An investigation into the remuneration–CSR nexus and if it can be affected by board gender diversity This study aims to investigate the relationship between remuneration packages [chief executive officer (CEO) and director] and independent corporate social responsibility (CSR) practices (marketplace, environment, community, workplace and money spent on CSR) of 588 Malaysian listed firms during 2006–2017. Further, the study explored the moderating effect of board gender diversity on the remuneration-CSR nexus.Design/methodology/approachThe dynamic estimator; namely, the system generalized method of moments given by Arellano and Bover (1995) has been used on the data set to control dynamic endogeneity, unobserved heterogeneity and simultaneity problems.FindingsFindings indicate a weak relationship between remuneration and CSR where prior CEO remuneration negatively influences marketplace activities, environment-related activities and workplace practices. However, directors’ remuneration leaves no effect on socially responsible activities. Moreover, board gender diversity negatively moderates the CEO remuneration-CSR relationship and an insignificant moderating effect has been observed for directors’ remuneration-CSR nexus.Practical implicationsThis study is particularly significant for regulatory bodies of Malaysia e.g. Securities Commission Malaysia, Bursa Malaysia, policymakers, investors and managers. For academia, this study fetches support from agency theory and overinvestment hypothesis to explain the relationships.Originality/valueThis paper is novel in providing empirical evidence on the moderating effect of board gender diversity on the relationship between remuneration and independent CSR activities for the first time. Moreover, this study has sourced several theoretical and practical implications. Then, the study uses a dynamic estimator that caters to the problems of endogeneity, simultaneity and heterogeneity. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

An investigation into the remuneration–CSR nexus and if it can be affected by board gender diversity

Corporate Governance , Volume 21 (4): 18 – May 26, 2021

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1472-0701
DOI
10.1108/cg-08-2020-0320
Publisher site
See Article on Publisher Site

Abstract

This study aims to investigate the relationship between remuneration packages [chief executive officer (CEO) and director] and independent corporate social responsibility (CSR) practices (marketplace, environment, community, workplace and money spent on CSR) of 588 Malaysian listed firms during 2006–2017. Further, the study explored the moderating effect of board gender diversity on the remuneration-CSR nexus.Design/methodology/approachThe dynamic estimator; namely, the system generalized method of moments given by Arellano and Bover (1995) has been used on the data set to control dynamic endogeneity, unobserved heterogeneity and simultaneity problems.FindingsFindings indicate a weak relationship between remuneration and CSR where prior CEO remuneration negatively influences marketplace activities, environment-related activities and workplace practices. However, directors’ remuneration leaves no effect on socially responsible activities. Moreover, board gender diversity negatively moderates the CEO remuneration-CSR relationship and an insignificant moderating effect has been observed for directors’ remuneration-CSR nexus.Practical implicationsThis study is particularly significant for regulatory bodies of Malaysia e.g. Securities Commission Malaysia, Bursa Malaysia, policymakers, investors and managers. For academia, this study fetches support from agency theory and overinvestment hypothesis to explain the relationships.Originality/valueThis paper is novel in providing empirical evidence on the moderating effect of board gender diversity on the relationship between remuneration and independent CSR activities for the first time. Moreover, this study has sourced several theoretical and practical implications. Then, the study uses a dynamic estimator that caters to the problems of endogeneity, simultaneity and heterogeneity.

Journal

Corporate GovernanceEmerald Publishing

Published: May 26, 2021

Keywords: Agency theory; Board gender diversity; Corporate social responsibility; Executive remuneration; System GMM

References