مقاله انگلیسی رایگان در مورد مسئولیت اجتماعی شرکت، ارزش شرکت و مالکیت سازمانی تاثیرگذار – الزویر 2018

We examine how Corporate Social Responsibility (CSR), jointly with influential institutional ownership (IO), affects firm value around the 2008 global financial crisis. We find that the effect of CSR on firm value varies with the level of influential institutional ownership and depends upon economic conditions. Using difference-in-difference methods, we show that compared with non-CSR firms, CSR firms have higher firm values before the financial crisis but experience more loss in firm value during the crisis. Our findings suggest that the overall CSR effect depends on the relative dominance of two effects: conflict-resolution and overinvestment effect. In addition, we apply triple difference analysis and show that the relation between CSR and firm value depends upon the level of influential institutional ownership. Specifically, before the crisis, CSR positively affects the value of low institutional ownership firms and the effect is significantly weaker for firms with higher influential IO. During the crisis, the CSR-firm value relation is positive for high institutional ownership firms, suggesting that overinvestment concerns dominate when the crisis occurs. However, such a positive IO effect is not significant for CSR firms with high rollover risks. Our results are supported by a series of robustness tests.

Introduction

Is there a significant link between Corporate Social Responsibility (CSR) and financial performance or, ultimately, firm value? How does CSR, jointly with influential institutional ownership, affect firm value? In this paper, by applying difference-in-difference (DID) and triple difference (DDD) approaches, we document that institutional ownership (IO) can have nontrivial influences on the CSR-firm value relation. Existing theoretical research remains inconclusive on the effect of CSR on firm value or financial performance.1 The conflict resolution theory explains that high CSR activities can lead to high firm value by mitigating conflicts of interest between managers and non-investing stakeholders, improving firm reputation, and enhancing firm profitability.2 However, the overinvestment theory suggests that such practices are costly, generating overinvestment concerns, especially during the 2008 financial crisis. In addition, the empirical literature finds both positive and negative effects of CSR on firm value.3 For example, Bird, Hall, Momente, and Reggiani (2007) and Harjoto and Jo (2015) suggest that different aspects of CSR activities, such as community versus product related CSR or legal versus normative CSR, have various implications to firm value. Identifying the impact of CSR on firm value can be challenging. First, CSR can be endogenous to factors such as firm financial performance and liquidity, i.e., firms tend to do good when they do well. (Waddock and Graves (1997) and Hong, Kubik, and Scheinkman (2012)). This issue can lead to biased estimation on CSR-firm value relation. Second, the CSR- firm relation depends on which CSR effect dominates: the conflict resolution or the overinvestment effect. To overcome these challenges, we examine the CSR effect surrounding the 2008 financial crisis. Motivated by existing studies4 , we treat the recent financial crisis as an exogenous shock to firms and use it to disentangle the recursive relation between CSR and firm value. Faced with limited financial resources over an uncertain duration, firms tend to significantly reduce investment (Almeida, Campello, Laranjeira, and Weisbenner, 2012) and are unlikely to relate their CSR engagement to prior firm performance.