Date of Award
Spring 5-6-2023
Document Type
Honors Thesis
Department/Major
Economics
First Advisor
Sebastian Wai
Second Advisor
Michael Allgrunn
Third Advisor
James Driver
Keywords
CEO Compensation, Incentives, ESG
Subject Categories
Benefits and Compensation
Abstract
This paper examines the impact of environmental, social, governance (ESG) disclosure scores on chief executive officer (CEO) compensation. I analyze the S&P 500 from 2011 – 2021 utilizing the within estimation method for fixed effects regression models to find that a one point increase in a firm’s ESG disclosure score is associated with a 0.49% increase in CEO compensation, ceteris paribus. However, certain S&P 500 industries have an advantage in boosting their ESG disclosure score relative to other industries. After including interaction terms between industry and ESG disclosure score, I find that, for the median industry, a one point increase in a firm’s ESG disclosure score is associated with a 0.22% decrease in CEO compensation, ceteris paribus. When compared to alternative executive compensation packages (chief financial officer, chief operations officer, etc.), I find that a one point increase in a firm’s ESG disclosure score is associated with a 0.37% decrease in the average executive compensation for the median industry. Based on my findings, CEOs can gain a better overall understanding of how ESG disclosure effects CEO compensation within the S&P 500.
Recommended Citation
Rankin, Zane M., "ESG Disclosure Scores and CEO Compensation" (2023). Honors Thesis. 286.
https://red.library.usd.edu/honors-thesis/286