Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Peer Review Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Search Site Cite View This Citation Add to Citation Manager Citation Donald V. Moser, Patrick R. Martin; A Broader Perspective on Corporate Social Responsibility Research in Accounting. The Accounting Review 1 May 2012; 87 (3): 797–806. https://doi.org/10.2308/accr-10257 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search Dropdown Menu toolbar search search input Search input auto suggest filter your search All ContentThe Accounting Review Search Advanced Search

We examine the effect of a charitable contribution matching (CCM) program on employee effort. In CCM programs, employers commit to match employees' donations to charity. We expect CCM to activate a norm of other-regarding behavior, inducing employees to increase effort to benefit their employer. Experimental results robustly support our expectation. We find that CCM increases effort under both fixed-wage and performance-based incentive contracts. Further, our results suggest that CCM is more effective at eliciting effort than alternative uses of firm capital. Specifically, CCM is more effective at eliciting effort than the firm allocating an equivalent amount of capital to either direct firm charitable giving or increased performance-based pay. Our study suggests that CCM has efficient and robust effort-elicitation benefits that increase its value as a compensation tool incremental to any initial employee selection benefits from CCM and any effort benefits from firms' direct charitable giving.

Firms frequently attempt to increase profits by replacing some existing workers with new lower-wage workers. However, this strategy may be ineffective in an incomplete-contract environment because the new workers may provide lower effort in response to their lower wages, and hiring new lower-wage workers may damage the remaining original workers' reciprocal relationship with the firm. We conduct an experiment to examine this issue and find that when new lower-wage workers become available, firms hire them to replace original higher-wage workers and pay the new workers lower wages. However, these lower wages do not improve firm profit because the decision to hire new lower-wage workers causes both the new and remaining workers to provide lower effort. Moreover, hiring lower-wage workers reduces new workers' payoffs and, thus, decreases social welfare. These unintended consequences suggest that firms should consider both the wage savings and the potential costs when deciding whether to replace some workers with new lower-wage workers. We discuss the implications of our findings for contract design, hiring practices, and managerial accountants.