Executive compensation tied to ESG performance: International evidence

Cohen, Shira ; Kadach, Igor ; Ormazabal, Gaizka ; Reichelstein, Stefan

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URN: urn:nbn:de:bsz:180-madoc-638340
Document Type: Working paper
Year of publication: 2022
Place of publication: Mannheim
Edition: December 2022
Publication language: English
Institution: Business School > Stiftungsprofessur für ABWL (Reichelstein 2018-)
License: CC BY 4.0 Creative Commons Attribution 4.0 International (CC BY 4.0)
Subject: 330 Economics
Abstract: Using a wide sample of international publicly traded firms, this paper studies the rapidly increasing practice of relying on ESG metrics in executive compensation contracts. Our evidence suggests that this compensation practice varies at the country, industry, and firm level in ways that are consistent with efficient incentive contracting. We also observe that reliance on ESG metrics in executive compensation arrangements is associated with engagement, voting, and trading by institutional investors, which suggests that firms could be adopting this practice to align their management’s objectives with the preferences of certain shareholder groups. Finally, we find that the adoption of ESG Pay is accompanied by improvements in key ESG outcomes, but not by improvements in financial performance.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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