Paying by Donating: Corporate Donations Affiliated with Independent Directors

• 成果类型: Article
• 署名作者: Cai, Ye; Xu, Jin; Yang, Jun
• 署名单位: Santa Clara University; Virginia Polytechnic Institute & State University; Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa056
• 发表日期: 2021
• 页码: 618
• 关键词: free cash flow; ceo turnover; governance; boards; COMPENSATION; performance

摘要

Corporate donations to charities affiliated with the board's independent directors (affiliated donations) are large and mostly undetected due to lack of formal disclosure. Affiliated donations may impair independent directors' monitoring incentives. CEO compensation is on average 9.4% higher at firms making affiliated donations than at other firms, and it is much higher when the compensation committee chair or a large fraction of compensation committee members are involved. We find suggestive evidence that CEOs are unlikely to be replaced for poor performance when firms donate to charities affiliated with a large fraction of the board or when they donate large amounts.