Attunement theory, CEO's cyclical influence on corporate social responsibility and firm value
ISSN: 0307-4358
Article publication date: 23 May 2023
Issue publication date: 4 January 2024
Abstract
Purpose
This paper aims to further contribute to the growing stream of literature on the CEO's impact on corporate social responsibility (CSR). The authors shed light on the implications of attunement theory on which relatively less research has been done. Furthermore, this paper strives to reconcile contradictory findings of the effect of CEO tenure on CSR and use the immediate changes of CSR enacted by the new CEO upon firm value.
Design/methodology/approach
The empirical strategy of the paper is centered around CEO transition. Applying first difference model, the authors identify a tenure-varying pattern of CEO influence on CSR. Moreover, the authors base the analyses of CSR value relevance on the sudden change of CSR during CEO transition, and use a within-industry matching approach as the inferential strategy. Manual data collection is conducted extensively for robustness checks.
Findings
The authors find that CSR activities change drastically at the beginning of the new CEO's ascendancy. One exception to this general pattern of CSR policy change is when the new CEO is brought from outside the organization, a result supporting the attunement theory. The authors find that firm value increases (decreases) when the new CEO increases (decreases) the CSR investment above (below) the industry norm.
Originality/value
This paper is among the first ones in the extant literature that directly examines the analytical implications of attunement theory concerning the CEO's impact on the firm's CSR policies. Furthermore, the positive association between CSR and firm value corroborates the arguments of instrumental stakeholder theory.
Keywords
Acknowledgements
The authors thank Darius Palia, N. K. Chidambaran, Tavy Ronen, Michael Barnett, Nancy DiTomaso, Feng Gao, Simi Kedia, Oded Palmon and Robert Parinno for their comments. The authors also thank the David K. Whitcomb Center for Research in Financial Services for their partial financial support.
Citation
Brick, I.E. and Qiao, Y. (2024), "Attunement theory, CEO's cyclical influence on corporate social responsibility and firm value", Managerial Finance, Vol. 50 No. 1, pp. 75-91. https://doi.org/10.1108/MF-11-2022-0517
Publisher
:Emerald Publishing Limited
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