Copycat behavior in CSR incentive contracts: The role of board interlocks
(2021) DSI Annual Conference — Location: Online (17.November.2021)
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- et. al.
- Abstract
- The choice of performance measures in incentive contracts is usually explained by economic determinants. These explanations largely ignore the impact of social dynamics between boards. In this paper, we introduce imitation by board members to the research on incentive contract design. Using a sample of U.S. listed companies for the period of 2003 to 2015, we show that incentive contract imitation not only arises through compensation committee interlocks, but also through CEO interlocks. Through these interlocks, firms copy similar CSR performance measures in CEO compensation as their tied-to partners. Furthermore, our results show that imitation via compensation committee interlocks seems efficient, as it is associated with improvements in both financial and nonfinancial performance. In contrast, imitation through CEO interlocks is more self-serving, because our results show that it drives CEO compensation upward without substantively improving financial and nonfinancial performance.
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Antoons, C., & et al. (2021). Copycat behavior in CSR incentive contracts: The role of board interlocks. DSI Annual Conference, Online. https://hdl.handle.net/2078.5/108072