Incentive

Social responsibility

Moral hazard

Microeconomics

Public relations

Accounting

Economics

Discretion

Market economy

Computer science

Officer

Business

Corporate governance

Shareholder value

Management

Political science

Value (mathematics)

Corporate social responsibility

Corporate title

Finance

Chief executive officer

Machine learning

Shareholder

Business Strategy and the Environment

This paper seeks to explore how chief executive officer (CEO) ability influences the economic impact of corporate social responsibility strategic decisions. Currently, the evidence on the impact of corporate social responsibility on the value of the company is mixed; in this paper, we aim to observe the moderate role played by this particularity of the CEO in the relationship between socially responsible commitment and financial performance. Our results identify that the most able CEOs make investments in social and environmental practices that lead to greater financial performance; in contrast, the less able CEOs can overinvest or underinvest in an opportunistic way for personal benefit at shareholders' expense. In addition, the role that CEO ability plays in social and environmental strategies is particularly pertinent in munificent environments that foment managerial discretion; in these contexts, high managerial ability leads to investment in socially responsible performance, which benefits shareholders by alleviating moral hazard.

Chief executive officer ability, corporate social responsibility, and financial performance: The moderating role of the environment