Publication: Executive Compensation and Misconduct: Environmental Harm
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Date
2016-02-23
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Minor, Dylan. "Executive Compensation and Misconduct: Environmental Harm." Harvard Business School Working Paper, No. 16-076, January 2016.
Abstract
We explore the relationship between managerial incentives and misconduct using the setting of environmental harm. We find that high powered executive compensation can increase the odds of environmental law-breaking by 40-60% and the magnitude of environmental harm by over 100%. We document similar results for the setting of executive compensation and illegal financial accounting. Finally, we outline some managerial and policy implications to blunt these adverse incentive effects.
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executive compensation, corporate governance, misconduct, environmental performance, accounting scandal, sustainable finance
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