Are CSR activities associated with shareholder voting in director elections and say-on-pay votes?

When making investment decisions, many investors now regularly consider a company’s CSR activities along with traditional financial performance measures (Elliott et al., 2014). Our study considers whether shareholders may also consider CSR activities when voting in director elections and say-on-pay votes. We find that CSR performance is associated with shareholder support in both director elections and say-on-pay votes. In particular, we find higher support for both director elections and executive compensation when there are more CSR strengths. Additionally, we find that the social strength aspect of CSR is the most important component in the relationships between CSR and director elections and that the environmental strengths aspect is the most important component in the relationship between CSR and executive compensation. Our results suggest that shareholders may value certain types of CSR and are more supportive of boards and management when CSR performance is stronger

Has the Likelihood of Appointing a CEO with an Accounting/Finance Background Changed in the Post-Sarbanes Oxley Era?

Congress passed the Sarbanes–Oxley Act (SOX) in July 2002 to improve the accuracy and reliability of financial reporting. The Act increased boards of directors’ responsibilities for financial reporting and control. Did it consequently increase boards’ preferences for a CEO with financial experience to protect against the potential reputational and/or legal losses that directors incur when financial scandals happen? We investigated whether newly appointed CEOs in the post-SOX period were more likely to have accounting or finance experience than in the pre-SOX period. Using a sample of 264 CEO changes from 2001 to 2004, we found that the percentage of newly-appointed CEOs with accounting/finance backgrounds significantly increased in the post-SOX period compared to the pre-SOX period. Our results suggest that the events surrounding the passage of the Sarbanes–Oxley Act may have affected the CEO background experience preferred by boards of directors

Andersen And The Market For Lemons In Audit Reports

Previous accounting ethics research berates auditors for ethical lapses that contribute to the failure of Andersen (e.g., Duska, R.: 2005, Journal of Business Ethics 57, 17-29; Staubus, G.: 2005, Journal of Business Ethics 57, 5-15; however, some of the blame must also fall on regulatory and professional bodies that exist to mitigate auditors\u27 ethical lapses. In this paper, we consider the ethical and economic context that existed and facilitated Andersen\u27s failure. Our analysis is grounded in Akerlof\u27s (1970, Quarterly Journal of Economics August, 488-500) Theory of the Market for Lemons and we characterize the market for audit reports as a market for lemons. Consistent with Akerlof\u27s model, we consider the appropriateness of the countervailing mechanisms that existed at the time of Andersen\u27s demise that appeared to have effectively failed in counteracting Andersen\u27s ethical shortcomings. Finally, we assess the appropriateness of the remedies proposed by the Sarbanes-Oxley Act of 2002 (SOA) to ensure that similar ethical lapses will not occur in the future. Our analysis indicates that the SOA regulatory reforms should counteract some of the necessary conditions of the Lemons Model, and thereby mitigate the likelihood of audit failures. However, we contend that the effectiveness of the SOA critically depends upon the focus and attention of the Public Companies Accounting Oversight Board (PCAOB) towards assessing the ethical climates of public accounting firms. Assessments by the PCAOB of public accounting firm\u27s ethical climate are needed to sufficiently ensure that public accounting firms effectively promote and maintain audit quality in situations where unconscious bias or economic incentives may erode the public accounting firm\u27s independence. © Springer Science+Business Media B.V. 2007

Entrenchment v. long- term benefits: Classified boards and CSR

Purpose Althought most corporate directors face reelection by shareholders each year, directors of companies with classified boards are elected for miltiple-year terms. Classified boards may engender managerial entrenchment, which may make directors less responsive to shareholders\u27 interest in corporate social responsibility (CSR). This study aims to assess whether larger boards, with potentially more diverse voices, may be positively related to CSR, and a larger board may change the classified boards/CSR relationships. Design/method/approach The authors examine the relationship between board type (companies with and without classified boards), boards size and CSR for 4,489 firm-years (1,540 with classified boards and 2,949 without classified boards) from 2013 through 2015. Findings The authors find no difference in CSR strengths between companies with and without classified boards, but the authors do find that companies with classified boards have more CSR concerns than companies without classified boards. For all types of boards, a larger board size is associated with more CSR strengths and reduces the negative impact of having and classified board on CSR concerns. Practical Implications Classified boards may be less responsive to shareholders\u27 preference for reduced company CSR concer,s but and increase in board size can mititgate this effect. Social Implications Classified boards may weaken a company\u27s CSR performance. Originality This is the first paper to consider the relationship between classified board and CSR

External CSR Rating Influences on Shareholder Voting Patterns for CSR Shareholder-Sponsored Proposals

We examine the perceived influence of externally generated firm ratings of corporate social responsibility (CSR) on voting for shareholder-sponsored CSR proposals. Using stakeholder and legitimacy theories, we introduce two rationales that relate shareholder voting decisions to the firm’s CSR performance: the complementary perspective where investors rely on management’s branding or image of the firm for CSR performance, and the sufficiency perspective where shareholders consider legitimacy effects of firm CSR performance. Our examination of 473 CSR shareholder-sponsored proposals during the 2013 to 2015 proxy seasons reveals a negative relationship between support for shareholder-sponsored CSR proposals and CSR strengths, particularly for social and environmental CSR strengths. We also find a positive relationship between support for shareholder-sponsored CSR proposals and CSR concerns, particular in the area of environmental CSR concerns. These results partially support the sufficiency perspective that incorporates shareholder legitimacy concerns. When companies have poor CSR performance, shareholders may view further CSR initiatives as beneficial to the firm

Are CSR activities associated with shareholder voting in director elections and say-on-pay votes?

When making investment decisions, many investors now regularly consider a company\u27s CSR activities along with traditional financial performance measures (Elliott et al., 2014). Our study considers whether shareholders may also consider CSR activities when voting in director elections and say-on-pay votes. We find that CSR performance is associated with shareholder support in both director elections and say-on-pay votes. In particular, we find higher support for both director elections and executive compensation when there are more CSR strengths. Additionally, we find that the social strength aspect of CSR is the most important component in the relationships between CSR and director elections and that the environmental strengths aspect is the most important component in the relationship between CSR and executive compensation. Our results suggest that shareholders may value certain types of CSR and are more supportive of boards and management when CSR performance is stronger

Are Csr Activities Associated With Shareholder Voting In Director Elections And Say-On-Pay Votes?

When making investment decisions, many investors now regularly consider a company\u27s CSR activities along with traditional financial performance measures (Elliott et al., 2014). Our study considers whether shareholders may also consider CSR activities when voting in director elections and say-on-pay votes. We find that CSR performance is associated with shareholder support in both director elections and say-on-pay votes. In particular, we find higher support for both director elections and executive compensation when there are more CSR strengths. Additionally, we find that the social strength aspect of CSR is the most important component in the relationships between CSR and director elections and that the environmental strengths aspect is the most important component in the relationship between CSR and executive compensation. Our results suggest that shareholders may value certain types of CSR and are more supportive of boards and management when CSR performance is stronger

Directors & corporate social responsibility: Joint consideration of director gender and the director’s role

We examined the relationship between Corporate Social Responsibility (CSR) and director characteristics, including director gender and director role. Directors can have different roles on the board: executive directors (who are also managers of the company) and non-executive directors. Non-executive directors may be independent directors or grey directors (who are not executives but who have a relationship with the company or its executives that could compromise their independence). Female directors have been found in previous studies to be associated with CSR. We consider whether female directors are associated with CSR regardless of their director role, or whether females in different director roles may be more strongly associated with CSR. Using 4,194 firm-year observations from 2013 to 2015, we found that boards with more female directors have more CSR strengths and fewer CSR concerns. When examining the different roles assumed by female directors, we found that female independent directors are most strongly associated with CSR. Female executive directors were not associated the CSR and we had mixed results regarding female grey directors. Our results suggest the female director/CSR relationship depends upon both the gender of the director and the board role played by the director