Abstract

http://ssrn.com/abstract=1962120
 
 

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Do Managers Do Good with Other Peoples' Money?


Ing-Haw Cheng


Dartmouth College - Tuck School of Business

Harrison G. Hong


Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Kelly Shue


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

September 8, 2014

Fama-Miller Working Paper
UCD & CalPERS Sustainability & Finance Symposium 2013
AFA 2013 San Diego Meetings Paper
Chicago Booth Research Paper No. 12-47

Abstract:     
We find support for three key predictions of an agency motive for corporate social responsibility. First, increasing insider ownership decreases measures of firm goodness. We use the 2003 Dividend Tax Cut to increase after-tax insider ownership. Firms with moderate levels of insider ownership cut goodness by more than firms with low levels (where the tax cut has no effect) and high levels (where agency is less of an issue). Second, improved governance reduces corporate goodness. A regression discontinuity design of close votes around the 50% cut-off finds that passage of shareholder governance proposals leads to slower growth in goodness. Finally, we validate our results by showing that another measure of corporate perks, use of corporate jets, is correlated with corporate goodness and reacts similarly to shocks to governance.

Number of Pages in PDF File: 47

Keywords: corporate social responsibility, agency costs

JEL Classification: G30, G31, G35

working papers series





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Date posted: November 20, 2011 ; Last revised: September 10, 2014

Suggested Citation

Cheng, Ing-Haw and Hong, Harrison G. and Shue, Kelly, Do Managers Do Good with Other Peoples' Money? (September 8, 2014). Fama-Miller Working Paper; Chicago Booth Research Paper No. 12-47. Available at SSRN: http://ssrn.com/abstract=1962120 or http://dx.doi.org/10.2139/ssrn.1962120

Contact Information

Ing-Haw Cheng
Dartmouth College - Tuck School of Business ( email )
Hanover, NH 03755
United States
Harrison G. Hong (Contact Author)
Princeton University - Department of Economics ( email )
Princeton, NJ 08544-1021
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Kelly Shue
University of Chicago - Booth School of Business ( email )
5807 S Woodlawn Avenue
Chicago, IL 60637
United States
HOME PAGE: http://https://sites.google.com/site/kellyshue/

Chicago Booth School of Business Logo

National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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