Stakeholder management reputation and its effects on CEO dismissal and CEO compensation
"This dissertation examines the influence of an organization’s reputation for stakeholder management on outcomes relevant to corporate executives. I theorize that organizations develop two distinct reputations for stakeholder management. The first (for ease of exposition) is a reputation for “doing good.” ""Do good"" stakeholder management reputation is exemplified by organizational actions that are perceived to generate positive spillovers. The second is a reputation for “avoiding harm.” ""Avoid harm"" stakeholder management reputation is exemplified by organizational actions that are perceived to reduce negative spillovers. I propose that stakeholder management reputation offers a lens through which board members may make sense of a corporate executive’s competencies. This sensemaking process triggers cognitive evaluation processes that influence the type of attributions made about the ability of corporate leaders. These attributions in turn inform the decisions that are made on their behalf. The first study examines the effect of the reputation for stakeholder management on CEO dismissal. I propose that a reputation for ""avoid harm"" stakeholder management is more beneficial to alleviate the negative effects of poor financial performance on CEO dismissal. The second study examines the effect of the organization’s reputation for stakeholder management on CEO compensation. Here I propose that a reputation for ""do good"" stakeholder management holds a more positive association with CEO compensation relative to the reputation for ""avoid harm"" stakeholder management. I also examine the moderating role of firm performance, board independence and information uncertainty. I test these ideas on a sample of S&P-500 firms and the empirical analysis provides partial support for these ideas."
University of Illinois - Urbana-Champaign
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University of Illinois at Urbana-Champaign