When Do CEOs Engage in CSR Activities? Performance Feedback, CEO Ownership, and CSR

The growing importance of corporate social responsibility (CSR) for firms' sustainability has been spurring scholarly attempts at identifying the antecedents of CSR activities. This study examines how CEO ownership differentially affects firms' CSR activities in response to their performance relative to aspirations. Building upon the agency theory and the performance feedback model, we argue that CEOs with greater ownership are relatively more likely to increase their firms' CSR activities than those with smaller ownership as their firms' performance further decreases below or increases above their aspiration levels, because they typically have more discretionary power and a greater pool of behavioral alternatives. Our fixed-effects analysis of the panel data from the U.S. crude petroleum and natural gas industry between 1995 and 2016 found that there is a systematic difference in how firms' CSR activities are adjusted in response to negative performance feedback depending on the levels of CEO ownership, but no significant difference in the face of positive performance feedback. The overall results imply that the CEOs tend to care about CSR only when performance is near their target and not so much when performance is far below or above the target, especially if their stock ownership is low.