The effect of academic top executives on corporate social responsibility: potential motivation and its outcomes

Abstract

This paper investigates whether there is ethical or opportunistic motivation behind academic top executives’ (ATEs) engagement in corporate social responsibility (CSR) by exploring how ATEs relate to CSR practices and their consequences on corporate misbehavior and performance. We find that firms run by ATEs invest more in CSR. Moreover, CSR firms with ATEs are unlikely to be involved in corporate fraud and aggressive tax avoidance, especially when firms have low institutional ownership and fewer analysts and are located in low law enforcement and socially dishonest environments. We also document that the CSR performance brought by ATEs is positively associated with subsequent firm performance. Overall, our study suggests that academic experience has important implications for understanding executives’ ethical leadership and driving firms’ ethical CSR.

Keywords:

• Academic top executives
• corporate social responsibility
• corporate fraud
• aggressive tax avoidance

JEL Classification:

• G30
• G34
• J16

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 According to Shen et al. (2020), 57.6% of top management teams of listed companies possess academic backgrounds. Additionally, Cho et al. (2017) also find that in 38.5% of S&P 1500 firms, there is at least one professor serving on their boardrooms.

2 Previous research pointed out that the chairman has a decisive influence on a firm’s operational decisions in China (Feng & Johansson, 2018), and the CEO often active a key role in firms’ decision-making (Westphal & Fredrickson, 2001). The Chairman and CEO is in most critical positions at a firm (He et al., 2021). Accordingly, as with prior literature (Lin et al., 2020; Luo et al., 2017), in our study, we only focus on the firm’s top executives, that is Chairman and CEO. This is because compared to the outside director, top executives who served in crucial positions tend to influence the firm more effectively, and academic top executives have a stronger ability to inject their personal preferences for ethics into CSR engagement.

3 It should be noted that we do not assert tax avoidance as unethical. As overly aggressive tax avoidance activities place a sustainable cost on society (Bird & Davis-Nozemack, 2018), it is widely viewed as less ethical or irresponsible.

4 To ensure the lengthy of our paper is reasonable, we choose to provide a electronic link about the PSM results: https://onedrive.live.com/view.aspx?resid=9EC92E43756156F1%21874&authkey=!ALV7tdEQbz9xhR8.

Additional information

Funding

This work was supported by Shaanxi Provincial Social Science Foundation [grant numbers 2022R033;2022R016; 2022R024]; National Natural Science Foundation of China [grant number 71901171]; Humanities and Social Science Fund of Ministry of Education of China [grant number 18YJA790064]; China Scholarship Council [grant number 202306280157]; The Soft Science Research Project of Shanghai Science and Technology Committee [grant number 22692114100]; Shaanxi Provincial Soft Science Project [grant numbers 2019KRM067; 2022KRM111; 2023-CX-RKX-033]; The Special Project for Philosophical and Social Sciences Research in Shaanxi Province [grant number 2024QN018]; The Fundamental Research Funds for the Central Universities [grant number 3102021XJS01].