Top management inside debt and corporate social responsibility? Evidence from the US

Sabri Boubaker, Kaouther Chebbi, Jocelyn Grira

    Research output: Contribution to journalJournal Articlepeer-review

    18 Citations (Scopus)

    Abstract

    This study provides evidence on the relationship between CEO inside debt and corporate social responsibility (hereinafter, CSR). We find that an increase in CEO inside debt leads to high levels of CSR. This finding is robust to controlling for the sensitivity of CEO equity compensation to volatility as well as to alternative measures of CSR. We also find that CEO inside debt is directly related to firms’ primary stakeholders (Community, Diversity, Employee Relations, Environment, and Product Characteristics). Our results are in line with the risk mitigation hypothesis and shed more light on CSR as a channel through which managers with more inside debt tend to respond to debtholders’ demands as their appetite for risk decreases.

    Original languageEnglish
    Pages (from-to)98-115
    Number of pages18
    JournalQuarterly Review of Economics and Finance
    Volume78
    DOIs
    Publication statusPublished - Nov. 2020

    Keywords

    • CEO inside debt
    • Corporate social responsibility
    • Ethics in finance

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