Corporate social responsibility and CEO risk incentives from the behavioral agency model perspective Implications for idiosyncratic risk

Document Type : Original Article

Author

Ph.D. of Accounting and Islamic Azad University lecturer

Abstract

The purpose of this research is to develop an behavioral agency model by focusing on the moderating role of corporate social responsibility on the relationship between CEO risk incentives and corporate idiosyncratic risk. The main. This research has been carried out using annual data of companies accepted in Tehran Stock Exchange during the period of 2012-2018. For testing of research hypotheses, multivariate linear regression has been used based on panel data. Empirical results show that CEO risk incentives has a positive and significant effect on firm idiosyncratic risk only in low CSR firms that attempt to maximize only investing stakeholders’ interests. In high CSR firms, that attempt to balance the interests of both investing and non-investing stakeholders, CEO risk incentives has no effect on firm idiosyncratic risk. The findings of our paper contribute to enrich the corporate social responsibility /CEO risk incentives literature, and provide academics and managers a clearer understanding of the effect brought about by the corporate social responsibility and CEO risk incentives on corporate idiosyncratic risk.

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