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Corporate Social Responsibility and Executive Compensation before and after Sarbanes-Oxley
Lois S. Mahoney, Eastern Michigan University
Pamela Roush, University of Central Florida
Linda Thorne , York University
ABSTRACT. This paper examines Corporate Social Responsibility (CSR) and executive compensation for 666 US firms, and considers how it has changed during the time that we have had an increase in corporate governance regulation. Unfortunately, but not surprisingly, the results of our analysis show that when comparing the PreSox to PostSox periods, our comprehensive measure of CSR (Total CSR) decreased in firms as did the strength of the association between Total CSR and executive compensation, excepting for Long term compensation (LTC). Our analysis suggests that the regulatory environment, as typified by Sox, may be resulting in increased transparency regarding the measurement of CSR and the revelation of more CSR Weaknesses than before. Furthermore, the Sox may be instrumental in persuading Boards to utilize LTC as a means to encourage CSR which requires sustained effort over an extended time horizon.
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