Rewarding morality: How corporate social responsibility shapes top management team compensation votes

Abstract In recent years, scholars have become increasingly interested in the effects of organizations’ corporate social responsibility (CSR) efforts on observers’ perceptions and behaviors. We extend this literature by drawing from person perception theories and ethics research to propose that CSR impacts shareholders’ approval of TMT compensation packages. In contrast to the view that shareholders prefer organizations to avoid allocating resources to CSR, we argue that CSR increases shareholder perceptions of Top Management Team (TMT) members’ moral character, which in turn increase shareholder approval of TMT compensation. Furthermore, we hypothesize that CSR industry norms moderate these effects, such that the effects are strongest when a company’s CSR engagement exceeds its industry’s norm. We test our model by triangulating evidence from three distinct studies: an archival analysis of the S&P 1500, a decision-making experiment based on a sample of shareholders, and an online experiment using a more stringent manipulation of firms’ CSR stances. Implications for theory and practice are discussed.