The Effect of Corporate Social Responsibility on Management Compensation: Do Corporate Governance and Performance Matter?

Abstract

This study aims to examine the indirect effect of corporate social responsibility (CSR) on management compensation. Tests were conducted with moderated mediation models to banking companies listed on the Indonesia Stock Exchange in 2016. The results show that corporate governance (CG) moderates the influence of CSR on corporate performance. However, instead of having indirect effect, the results reveal that CSR has direct positive effect on management compensation. It means that market appreciates CSR carried out by those companies even though it does not necessarily serve as the basis for determining management compensation. Keywords—Corporate Social Responsibility, Corporate Governance, Corporate Performance, Indirect Effect, Management Compensation.