Does Whipping Tournament Incentives Spur CSR Performance? An Empirical Evidence From Chinese Sub-national Institutional Contingencies

Muhammad Kaleem Khan; Shahid Ali; R M Ammar Zahid; Chunhui Huo; Mian Sajid Nazir

doi:10.3389/fpsyg.2022.841163

Does Whipping Tournament Incentives Spur CSR Performance? An Empirical Evidence From Chinese Sub-national Institutional Contingencies

Front Psychol. 2022 Feb 25:13:841163. doi: 10.3389/fpsyg.2022.841163. eCollection 2022.

Authors

Muhammad Kaleem Khan¹, Shahid Ali², R M Ammar Zahid³, Chunhui Huo¹, Mian Sajid Nazir^{4

5}

Affiliations

¹ Asia-Australia Business College, Liaoning University, Shenyang, China.
² School of Management Science and Engineering, Nanjing University of Information Science and Technology, Nanjing, China.
³ School of Accounting, Yunnan Technology and Business University, Kunming, China.
⁴ Institute of Administrative Sciences, University of the Punjab, Lahore, Pakistan.
⁵ HEC Montreal, University of Montreal, Montreal, QC, Canada.

Abstract

The current study investigates whether tournament incentives motivate chief executive officer(s) (CEOs) to be socially responsible. Furthermore, it explores the role of sub-national institutional contingencies [i.e., state-owned enterprises (SOE) vs. non-SOEs, foreign-owned entities (FOE) vs. non-FOEs, cross-listed vs. non-cross-listed, developed region] in CEO tournament incentives and the corporate social responsibility performance (CSRP) relationship. Data were collected from all A-shared companies listed in the stock exchanges of China from 2014 to 2019. The study uses the baseline methodology of ordinary least squares (OLS) and cluster OLS regression. Moreover, firm-fixed effects regression, two-stage least squares regression, and propensity score matching deal with the endogeneity problem and check the robustness of the results. The results provide reliable evidence that tournament incentives motivate CEOs to be more socially responsible. On the other hand, sub-national institutional contingencies positively affect the association between CEO tournament incentives and CSRP. The findings have important implications for companies and regulators who wish to enhance CSP by providing incentives to top managers.

Keywords: CEO tournament incentives; corporate social performance; development; foreign ownership; sub-national institutional contingencies; tournament theory.