Looking Far or Close: The Explanatory Role of Myopic Management in the Relationship Between CEO Dominance and Corporate Social Responsibility

We draw from tournament theory and the literature on executive compensation to examine myopic management’s role in the relationship between chief executive officer (CEO) dominance and corporate social responsibility (CSR) performance. We collect and analyze data from KLD, Execucomp, and Compustat over a 12-year period. Our findings suggest that CEO dominance, measured by the pay disparity between CEOs and other executives, is positively associated with myopic management, which, in turn, lowers CSR performance. In particular, CEOs receiving much greater short-term compensation (e.g., salary and bonus) relative to other executives are more likely to choose myopic management as a strategy to win the executive tournament rather than allocating attention and resources to long-term objectives for sustainability. We also test the indirect effect of CEO dominance on CSR performance. Finally, we discuss theoretical and practical implications of the results.