Robert H Davidson
McCombs School of Business, The University of Texas at Austin
United States Securities and Exchange Commission
Carlson School of Management, University of Minnesota
Abbie J Smith
The University of Chicago Booth School of Business
We study the role of individual CEOs in explaining corporate social responsibility (CSR) scores. We show that CEO fixed-effects explain 56% of the variation in CSR scores, a significant portion of which is attributable to a CEO’s “materialism” (relatively high luxury asset ownership). Specifically, firms led by materialistic CEOs have lower CSR scores, fewer strengths, and more weaknesses. Finally, we document that CSR scores in firms with non-materialistic CEOs are positively associated with accounting and market performance. In contrast, CSR scores in firms with materialistic CEOs are unrelated to profitability on average; however this association is decreasing in CEO power.
Keywords: Executive materialism; corporate social responsibility, accounting profitability.
JEL Classification Codes: G30; G34; G38