Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Tianmin Cheng; Wen Hua Sharpe; Abdel K. Halabi

doi:10.3390/jrfm17070258

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Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Journal article

Open access

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Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance

Tianmin Cheng, Wen Hua Sharpe and Abdel K. Halabi

Journal of Risk and Financial Management, Vol.17(7), pp.1-20

2024

DOI: https://doi.org/10.3390/jrfm17070258

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Abstract

CEO regulatory focus

corporate social responsiblity (CSR)

firm performance (FP)

mediation

upper echelons

Regulatory focus theory theorizes that there are two distinct dispositional foci of self-regulation (promotion focus and prevention focus) that impact individuals’ motivational tendencies to achieve their decision-making processes. This study integrates regulatory focus theory with upper echelons theory to investigate how CEO regulatory focus (i.e., higher degrees of promotion focus relative to prevention focus) influences corporate strategic outcomes, particularly regarding the pursuit of corporate social responsibility (CSR) performance and firm performance. This study uses data collected from the annual reports of S&P 1500 firms in the US from 2000 to 2018. Results show a negative association between CEOs who are predominantly promotion-focused and CSR performance. This negative association is diminished in firms with better corporate governance (i.e., higher CEO equity compensation and greater institutional ownership). The results also show that CSR plays a mediating role in the relationship between CEO regulatory focus and firm performance. These findings not only contribute to the existing literature by highlighting the role of CEO regulatory focus in shaping CSR initiatives but also shed light on its implications for firm performance.

Details

Title: Diverging Paths: CEO Regulatory Focus, Corporate Social Responsibility, and the Enigma of Firm Performance
Authors: Tianmin Cheng - Southwest University of Political Science & Law
Wen Hua Sharpe - University of the Sunshine Coast, Queensland, School of Business and Creative Industries
Abdel K. Halabi (Corresponding Author) - Federation University
Publication details: Journal of Risk and Financial Management, Vol.17(7), pp.1-20
Publisher: MDPI AG
Date published: 2024
DOI: 10.3390/jrfm17070258
ISSN: 1911-8074
Copyright note: © 2024 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).
Data Availability: Dataset available on request from the authors.
Organisation Unit: School of Business and Creative Industries
Language: English
Record Identifier: 991049698102621
Output Type: Journal article

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