TY - JOUR
T1 - Labor market evaluation versus legacy conservation
T2 - What factors determine retiring CEOs' decisions about long-term investment?
AU - Kang, Jingoo
N1 - Funding Information:
I thank the editor, Professor Will Mitchell, and two anonymous reviewers for their helpful comments and guidance throughout the revision process. I also appreciate the valuable feedback from Raffi Amit, Jonghoon Bae, Mary Benner, Peter Cappelli, Seajin Chang, Nien-he Hsieh, Aseem Kaul, Ian MacMillan, Jon Jungbien Moon, Evan Rawley, and Harbir Singh on earlier versions of this paper. Finally, I thank Andy Young Han Kim for sharing his CEO-media data for an unreported supplementary analysis. This work was supported by Nanyang Business School, the National Research Foundation of Korea Grant funded by the Korean Government (NRF-2012S1A3A2033412), and SK Research Fund of Korea University.
Publisher Copyright:
Copyright © 2014 John Wiley & Sons, Ltd.
PY - 2016/2/1
Y1 - 2016/2/1
N2 - Do CEOs nearing retirement attempt to boost short-term firm performance or do they care more about what type of legacy they will leave behind? The two opposing predictions about the behavior of CEOs upon retirement suggest that retiring CEOs' decisions about certain long-term investment items may be more complex than suggested in the literature. In search of an answer to this question, we examine the relationship between CEO retirement and the level of firm commitment to corporate social responsibility (CSR). The results show that CEO retirement has a negative effect on firm commitment to CSR. However, we found that the negative effect becomes weaker when CEOs retire at relatively older ages or are retained on the board of directors of their own firms. Our finding suggests that CEOs who face weaker pressure from the labor market for corporate directors may pay more attention to preserving their legacy.
AB - Do CEOs nearing retirement attempt to boost short-term firm performance or do they care more about what type of legacy they will leave behind? The two opposing predictions about the behavior of CEOs upon retirement suggest that retiring CEOs' decisions about certain long-term investment items may be more complex than suggested in the literature. In search of an answer to this question, we examine the relationship between CEO retirement and the level of firm commitment to corporate social responsibility (CSR). The results show that CEO retirement has a negative effect on firm commitment to CSR. However, we found that the negative effect becomes weaker when CEOs retire at relatively older ages or are retained on the board of directors of their own firms. Our finding suggests that CEOs who face weaker pressure from the labor market for corporate directors may pay more attention to preserving their legacy.
KW - corporate social performance
KW - labor market evaluation
KW - legacy conservation
KW - long-term investment
KW - managerial decision-making
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U2 - 10.1002/smj.2234
DO - 10.1002/smj.2234
M3 - Article
AN - SCOPUS:84957437071
SN - 0143-2095
VL - 37
SP - 389
EP - 405
JO - Strategic Management Journal
JF - Strategic Management Journal
IS - 2
ER -