What is it about?
How consequential is social reputation for a CEO's career? We find that the CEOs of those firms with greater strengths (controversies) on corporate social responsibilities (CSR) are more (less) likely to serve on external boards, and they hold more (fewer) outside directorships. CEOs lose board seats after the media expose their companies in negative environmental and social news. More nuanced analyses show that workplace diversity and supply-chain human rights are most consequential among the social and environmental dimensions of CSR. Our study demonstrates that CEOs are judged on their companies' social reputation in the director labor market. Our results also suggest that social reputation plays an important role in promoting CSR.
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Why is it important?
CEOs are judged on their companies' social reputation in their career progression. Social reputation is a consequential incentive for a CEO's social conduct. Companies should be mindful of the implications for PR relation with stakeholders when appointing directors and executives.
Perspectives
Social reputation drives company executives' social conduct. CSR is essential for company public relation. Companies prefer not to damage their social reputation among important stakeholders, such as customers, suppliers, employees and governments. Wise individuals (companies) choose to work with employers (employees) of good social reputation.
Professor Ning Gao
University of Manchester
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This page is a summary of: Are CEOs judged on their companies' social reputation?, Journal of Corporate Finance, April 2020, Elsevier,
DOI: 10.1016/j.jcorpfin.2020.101621.
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