Behavioral Agency Theory and Corporate Social Irresponsibility

Tanusree Jain, Rashid Zaman

Research output: Chapter in Book/Report/Conference proceedingConference abstract in proceedingsResearchpeer-review


The behavioral agency theory (BAM) posits that executive risk preferences are influenced by losses to their current option wealth relative to gains from their prospective option wealth. Accordingly, current option wealth attenuates risk-taking while prospective option wealth amplifies risk-taking. In the context of corporate irresponsible behaviors, this study attempts to advance BAM by theorizing how the presence of conditions that give rise to distributive and procedural injustice in CEO compensation can further amplify the positive effects of CEO prospective option wealth on risk-taking, thereby destroying stakeholder value. Our findings based on a longitudinal cross-sectional sample of 8,669 firm-year observations for the period 2001-2018 support our theorization that CEO perceptions of unfair compensation amplifies excessive risk-taking thereby increasing corporate social irresponsibility. Our study has important implications for advancing BAM and for the study and design of executive compensation.
Original languageEnglish
Title of host publicationProceedings of the Eighty-third Annual Meeting of the Academy of Management
EditorsSonia Taneja
Number of pages1
Place of PublicationBriarcliff Manor, NY
PublisherAcademy of Management
Publication date2023
Publication statusPublished - 2023
EventThe Academy of Management Annual Meeting 2023: Putting the Worker Front and Center - Boston, United States
Duration: 4 Aug 20238 Aug 2023
Conference number: 83


ConferenceThe Academy of Management Annual Meeting 2023
Country/TerritoryUnited States
Internet address
SeriesAcademy of Management Annual Meeting Proceedings

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