Research Proposal Presentation: Rozhin Yousefvand-Mansouri
Ms. Rozhin Yousefvand-Mansouri, a doctoral student at McGill University in the Accounting area will be presenting her research proposal entitled:
CSP INCENTIVES IN CEO COMPENSATION CONTRACTS: WHEN TO EMBRACE AND WHEN TO AVOID
Date: Monday, February 26, 2018
Time: 9:00 am
Location: Room 310 (Samuel Bronfman Building – 1001 Sherbrooke Street West)
All are cordially invited to attend the presentation
Student Committee Chair: Professor Steve Fortin
Abstract:
This study extends the literature on the relation between executive compensation, Corporate Social Performance (CSP) and Corporate Financial Performance (CFP) by illustrating how the relation between CSP and CFP can be informative in setting executive compensation. Given the role of the board of directors in setting executive compensation, we discuss the board of directors’ fiduciary duty in the contexts of corporate social responsibility by referring to American corporate law and explain how the fiduciary duty of the board of directors accommodates and does not prevent Corporate Social Responsibility (CSR), even if complying with CSR goes against shareholders’ wealth maximization. Moreover, by combining contract theory literature with economics literature, we provide a theoretical framework which illustrates that contracting on CSP is effective only in situations when corporate social performance negatively affects financial performance. Relying on the proposed framework, we propose that corporations include CSR-based incentives in compensation contracts to promote social responsibility when the relation between CSP and financial performance is negative. Moreover, we hypothesize that when the relation between CSP and CFP is negative, not contracting on CSP further deteriorates CSP or leads to disasters and that when the relation between CSP and CFP is negative, contracting on CSP can be a sign of inefficiency and, at best, does not change CSP. We focus on employee health and safety aspects of CSR in an extractive industry and use the total number of recordable incident rate (TRIR) as the measure of corporate social performance to examine the hypotheses.
