If a company wants a leader who is committed to corporate social responsibility, it would be wise to hire a married man. Married men in the top leadership jobs typically have greater concern for their employees' well-being, and are more accepting of diverse employees, than are their non-married peers.
Those are the findings of a study led by the University of Connecticut and University of Saskatchewan and published in the Journal of Corporate Finance.
"What we found was absolutely fascinating,'' says Shantaram Hegde, professor of finance at UConn, who co-authored the paper with UConn alum Dev R. Mishra '01, professor of finance at University of Saskatchewan. "The social benefits of the union appear to be a significant driver of corporate policy.''
Family Life Broadens Perspective
Researchers analyzed 2,163 U.S. public corporations, from 1993 to 2008. Organizations with married CEOs accounted for about 86% of the those studied. The average age of the CEOs in the sample was about 55, with roughly six years of tenure with the company.
Corporate social responsibility is broadly defined as a firm's commitment to minimizing potential harmful effects of its operations on its stakeholders and maximizing its long-run beneficial impact on society.
Firms led by married CEOs were associated with significantly higher scores on a respected corporate social responsibility index, even after controlling for a wide range of variables such as age, tenure, gender, wealth, compensation and risk propensity. The findings were particularly clear when studying issues surrounding diversity and employee relations.
"We were able to build on social-science studies that found that married life is a catalyst for nourishing pro-social values and preferences among family members,'' Hegde said.
While unmarried CEOs do not ignore corporate social responsibility codes and standards, and may raise concerns about compliance with norms and laws, they seem to show less commitment to other corporate social responsibility programs, the authors found.
Meanwhile, married CEOs appear to embrace corporate social responsibility.
In particular, organizations led by married CEOs are more likely to support hiring and promotion of women, minorities, and disabled employees, as well as advancing gay and lesbian policies, the researchers say. They also scored well in affirmative action, employee benefits, labor relations, employee health and retirement benefits, safety and well-being, profit sharing and stock ownership.
And, while the number of women in the study was small -- less than 2% -- it appears that both spouses in a family are likely to have adopted pro-social preferences after marriage.
Corporate Leadership Transitions Prove It
To further scrutinize the findings, the researchers reviewed companies that had transitioned to new CEOs with a different marital status from their predecessors. The dataset of 3,466 firms indicated notable changes in corporate social responsibility following the transition.
"We found a significant drop in average corporate social responsibility results when a company transitioned from a married to an unmarried CEO,'' Hegde said. "Although based on a small number of observations, this test further isolates the influence of CEO marriage transitions from other types of CEO turnover, and helps strengthen our claim about a robust link between CEO marriage and corporate social responsibility.''
In addition to the family-induced effect, officers who choose marriage might have innate pro-social preferences because they agreed to pursue the tradition of marriage. However, the database that the researchers used to confirm marital status of CEOs only recorded marriage between opposite genders; another study would be needed to look at the impact of same-sex marriage.
Although businesses today are seeking leaders who are committed to their shareholders, they are increasingly concerned about the social impact of their businesses, ranging from the environment to employee relations, Hegde said. The modern-day CEO must balance the demands of profit maximization with social obligations, he said.
The #metoo movement, highlighting the abuse and harassment of employees, is just one of the revelations that quickly revised the qualifications of a leader-in-chief, he said. A year ago, Time magazine reported that more than 400 high-profile executives were accused of misconduct, and at least half were fired or resigned.
"With this emphasis on employee relations and welfare, the environment and sustainability, it is critical to have the right type of leader in the executive suite,'' Hegde said. "The right CEO can not only solve many problems but also contribute to a better society.''
"Obviously a company cannot discriminate based on marital status, when hiring a CEO or anyone else,'' Hegde continued. "But if you take the best leadership talent and select an unmarried CEO, executives and board members might consider a custom training program to better equip the top leader with a stronger, socially responsible perspective.''
Journal of Corporate Finance