Abstract

http://ssrn.com/abstract=2146282
 
 

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Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach


Caroline Flammer


University of Western Ontario - Ivey Business School

October 2013


Abstract:     
This study examines the effect of corporate social responsibility (CSR) on financial performance. Specifically, I analyze the effect of CSR-related shareholder proposals that pass or fail by a small margin of votes. The passage of such "close-call" proposals is akin to a random assignment of CSR to companies and hence provides a clean causal estimate. Consistent with the view that CSR is a valuable resource, I find that the adoption of CSR proposals leads to positive announcement returns and superior accounting performance. When I examine the channels through which companies benefit from CSR, I find that the adoption of CSR proposals is associated with an increase in labor productivity and sales growth. This evidence suggests that CSR improves employee satisfaction and helps companies cater to customers that are responsive to sustainable practices.

Number of Pages in PDF File: 46

Keywords: corporate social responsibility; financial performance; regression discontinuity; shareholder proposals

JEL Classification: M14, D24

working papers series





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Date posted: September 14, 2012 ; Last revised: October 27, 2013

Suggested Citation

Flammer, Caroline, Does Corporate Social Responsibility Lead to Superior Financial Performance? A Regression Discontinuity Approach (October 2013). Available at SSRN: http://ssrn.com/abstract=2146282 or http://dx.doi.org/10.2139/ssrn.2146282

Contact Information

Caroline Flammer (Contact Author)
University of Western Ontario - Ivey Business School ( email )
University of Western Ontario
1255 Western Road, Office 3351
London, Ontario N6G 0N1
Canada
+1 (519) 661-3144 (Phone)
HOME PAGE: http://publish.uwo.ca/~cflammer/
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