CEO power and corporate social responsibility: are the strengths and concerns of CSR significant?
Yasser Rezaei Pitenoei, Seyed Mohammad MoshashaeiPurpose
Stakeholder theory states that the chief executive officer (CEO) invests in corporate social responsibility (CSR) to increase firm value, not because of opportunistic behavior and self-interest incentives. On the other hand, based on agency theory, increasing the CEO’s power causes a conflict between the interests of managers and shareholders. So, the CEO will have sufficient motivation to increase investment in CSR. This study examines the relationship between CEO power and CSR in listed firms on the Tehran Stock Exchange (TSE).
Design/methodology/approach
The authors used a KLD inspired framework adapted to the Iranian context to calculate CSR. The panel data of the 1,030 firm-year observations from companies listed on the TSE during the years 2014–2023 was adopted in this study. The data were analyzed via fixed effects regression with cluster-robust standard errors to test the research hypothesis.
Findings
According to agency theory, this study finds that CEO power positively affects CSR. The authors also find that CEO power positively affects CSR’s positive rating (strengths) and has no significant effect on negative rating (concerns). In other words, the CEO’s power has a distinct impact on the strengths and concerns of the company’s social responsibility.
Originality/value
This study contributes to the emerging literature on CEO power and CSR by providing evidence from an underexplored institutional setting and by distinguishing between CSR strengths and CSR concerns. By demonstrating that CEO power primarily drives CSR strengths rather than concerns, the study refines agency theory perspective and offers a novel contribution distinct from prior work in developed markets. The findings provide insight into the experimental test of agency versus stakeholder theory in a unique institutional context. Beyond the Iranian context, the findings suggest that the institutional environment plays a decisive role in shaping the relationship between CEO power and CSR, offering broader implications for comparative corporate governance research in emerging markets.