TY - JOUR
T1 - Does adopting voluntary ESG practices affect executive compensation?
AU - Abudy, Menachem Meni
AU - Gavious, Ilanit
AU - Shust, Efrat
N1 - Publisher Copyright:
© 2022 Elsevier B.V.
PY - 2023/3
Y1 - 2023/3
N2 - The Equator Principles (EP) is a voluntary framework of environmental guidelines for financial institutions in project financing. This paper examines the impact of an EP adoption on executive compensation. Compared to a matched sample of non-adopting banks, we find that total compensation significantly increased in banks that adopted the EP. The increase was driven by larger grants of equity-based compensation. This effect of EP adoption on executive pay does not depend on the risk management framework of the bank or on the timing of the adoption. Lastly, we do not find evidence of a change in the adopting banks’ performance.
AB - The Equator Principles (EP) is a voluntary framework of environmental guidelines for financial institutions in project financing. This paper examines the impact of an EP adoption on executive compensation. Compared to a matched sample of non-adopting banks, we find that total compensation significantly increased in banks that adopted the EP. The increase was driven by larger grants of equity-based compensation. This effect of EP adoption on executive pay does not depend on the risk management framework of the bank or on the timing of the adoption. Lastly, we do not find evidence of a change in the adopting banks’ performance.
KW - Banks
KW - ESG
KW - Equator principles
KW - Executive compensation
KW - Financial institutions
UR - http://www.scopus.com/inward/record.url?scp=85146158214&partnerID=8YFLogxK
U2 - 10.1016/j.intfin.2022.101718
DO - 10.1016/j.intfin.2022.101718
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AN - SCOPUS:85146158214
SN - 1042-4431
VL - 83
JO - Journal of International Financial Markets, Institutions and Money
JF - Journal of International Financial Markets, Institutions and Money
M1 - 101718
ER -