CEO Materialism and Corporate Social Responsibility

Robert H Davidson
McCombs School of Business, The University of Texas at Austin

Aiyesha Dey
United States Securities and Exchange Commission
Carlson School of Management, University of Minnesota

Abbie J Smith
The University of Chicago Booth School of Business

February 2017

Abstract

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

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