TY - JOUR
T1 - Executive compensation and sustainable business practices
T2 - The moderating role of sustainability-based compensation
AU - Adu, Douglas A.
AU - Flynn, Antoinette
AU - Grey, Colette
N1 - Publisher Copyright:
© 2021 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.
PY - 2022/3
Y1 - 2022/3
N2 - This study seeks to contribute to the extant business strategy and the environment literature by investigating the effect of CEO pay and executive compensation (EC) on sustainable business practice (SBPs). It also distinctively ascertains whether the pay-for-sustainability sensitivity (PSS) is reinforced in firms with sustainability-based compensation (SBC) policy. Using a sample of 262 UK listed firms from 2009 to 2018, our findings are threefold. First, the findings reveal that both CEO pay and EC variables have positive effect on all SBP measures, except CO2 reduction performance where the link is negative. Second, the study shows that the PSS is reinforced for firms that implement SBC policy. Finally, we detect that both the PSS and the moderation effect of SBC on the PSS are higher in the symbolic construct of SBPs than the actual measures. The results support insights drawn from neo-institutional theory. The findings have key implications for regulators and policy makers.
AB - This study seeks to contribute to the extant business strategy and the environment literature by investigating the effect of CEO pay and executive compensation (EC) on sustainable business practice (SBPs). It also distinctively ascertains whether the pay-for-sustainability sensitivity (PSS) is reinforced in firms with sustainability-based compensation (SBC) policy. Using a sample of 262 UK listed firms from 2009 to 2018, our findings are threefold. First, the findings reveal that both CEO pay and EC variables have positive effect on all SBP measures, except CO2 reduction performance where the link is negative. Second, the study shows that the PSS is reinforced for firms that implement SBC policy. Finally, we detect that both the PSS and the moderation effect of SBC on the PSS are higher in the symbolic construct of SBPs than the actual measures. The results support insights drawn from neo-institutional theory. The findings have key implications for regulators and policy makers.
KW - environmental policy and stakeholder engagement
KW - executive compensation
KW - sustainable business practices
KW - sustainable development
UR - http://www.scopus.com/inward/record.url?scp=85117227820&partnerID=8YFLogxK
U2 - 10.1002/bse.2913
DO - 10.1002/bse.2913
M3 - Article
AN - SCOPUS:85117227820
SN - 0964-4733
VL - 31
SP - 698
EP - 736
JO - Business Strategy and the Environment
JF - Business Strategy and the Environment
IS - 3
ER -
