Taken for granted? The impact of stakeholder orientation on CSR and CEO's wealth and prominence

In this study, we assess the causal impact of stakeholder orientation on the impact of corporate social responsibility and CEO’s wealth and prominence. To obtain exogenous variation in stakeholder orientation, we exploit the enactment of state-level constituency statutes, which allow corporate executives and directors to consider non-shareholders’ interests when making business decisions. Using a cross-section of Texan firms during 2002-2012, we have found that the enactment of constituency statutes leads to significant increases in the quality of a firm’s corporate social responsibility (CSR); however, the effect of CSR does not necessarily lead to superior firm performance or value. We further argue and provide evidence suggesting that the obligated stakeholder orientation decreases the impact of CSR on the CEO’s compensation but increases the impact of CSR on the CEO’s media exposure. Finally, we posit that the impact of non-shareholder orientation on the CEO’s wealth and prominence is salient in non-consumer-focused industries, since the impact of CSR is depending upon the extent to how stakeholders take the value of it.