Do Actions Speak Louder than Words? The Case of Corporate Social Responsibility (CSR)

Abstract:     
We build upon and advance neo-institutional theory by developing hypotheses about the differential impact of symbolic and substantive corporate environmental, social and governance (ESG) actions on firm performance, contingent on the level of the firm’s prior CSR-based intangible assets. Our results indicate that symbolic ESG actions in the presence of higher intangibles have a higher positive impact on market value. Additionally, we find that the larger the interaction as well as the gap between symbolic and substantive actions, the higher the positive effect is on market value. We test our theory using the market-value equation and a database comprising 2,261 firms in 43 countries from 2002 to 2008. We discuss implications for strategy scholars and practitioners.

Number of Pages in PDF File: 44

Keywords: Corporate Social Responsibility (CSR), environmental, social and governance (ESG), market value, intangible assets, symbolic and substantive actions/decoupling

JEL Classification: M10, M14

working papers series