On the afternoon of January 12, 2024, Associate Professor Qin Bo from the Faculty of Business and Economics at the University of Melbourne was invited by the School of Management for academic exchange and delivered an academic lecture titled "Dealing with the ESG Storm: ESG Events and Earnings-based Incentives in CEO Compensation" in the 210 lecture hall of the School of Management. The lecture was chaired by Professor Su Kun, the head of the Accounting Department, with the participation of some faculty members and graduate students from the Accounting Department of the School of Management.

ESG refers to Environmental, Social, and Governance, which is an investment philosophy and corporate evaluation standard that focuses on a company's environmental, social, and governance performance rather than traditional financial performance. During the meeting, Qin Bo used recent ESG-related news events and corporate ESG disclosures as a backdrop to explore the fluctuations in stock prices and changes in executive abnormal compensation rates when companies experience ESG events. This led to the research question: Will companies respond to ESG events by reducing earnings-based incentives in CEO compensation? Through meticulous analysis of executive compensation design and research on the impact of executive compensation incentives on corporate development, Qin Bo indicated that after ESG events occur, companies will reduce the incentives based on earnings in their compensation packages. At the same time, the main motivation for companies to adjust CEO compensation is the reputational risk generated by the impact of ESG events, and after reducing the profit-based incentives in CEO compensation, companies will replace profit objectives with environmental, social, and governance-related objectives.

This research topic sparked extensive discussion among the attendees, who exchanged views with Qin Bo on research design, the organization of writing logic, and how to enrich further research. After the meeting, Su Kun summarized the lecture. This academic lecture was the first session of the 2024 Overseas Expert Lecture Series by the School of Management. It is of significant importance for the topic of adjusting CEO compensation design in response to external events, and it also has certain reference value for how companies can effectively respond to negative ESG events and achieve the goal of long-term sustainable development, providing an important learning and exchange opportunity for faculty and students.

(Written by Fu Sen Liu Lu, Reviewed by Shao Jing and Zhang Shuang)

Introduction to the Speaker:

Qin Bo is an associate professor in the Department of Accounting at the Faculty of Business and Economics, University of Melbourne. His current research areas include compensation incentives, ESG, and corporate governance. He received the Dean's Award for Excellence in Research from the University of Melbourne in 2015. His results have been published in core journals such as Accounting and Finance, Journal of Corporate Finance, Contemporary Accounting Research, British Accounting Review, and Journal of Accounting and Public Policy. He currently serves as an editor of Corporate Governance: An International Review, a member of the editorial board of Accounting and Business Research, and a guest reviewer for several journals including The Accounting Review, Contemporary Accounting Research, and Management Science.