Corporate Social Responsibility for Irresponsibility

27 Pages Posted: 29 Jul 2011 Last revised: 4 Sep 2011

See all articles by Matthew J. Kotchen

Matthew J. Kotchen

Yale University; National Bureau of Economic Research (NBER)

Jon Jungbien Moon

Korea University Business School

Date Written: July 2011

Abstract

This paper provides an empirical investigation of the hypothesis that companies engage in corporate social responsibility (CSR) in order to offset corporate social irresponsibility (CSI). We find general support for the causal relationship: when companies do more "harm," they also do more "good." The empirical analysis is based on an extensive 15-year panel dataset that covers nearly 3,000 publicly traded companies. In addition to the overall finding that more CSI results in more CSR, we find evidence of heterogeneity among industries, where the effect is stronger in industries where CSI tends to be the subject of greater public scrutiny. We also investigate the degree of substitutability between different categories of CSR and CSI. Within the categories of community relations, environment, and human rights--arguably among those dimensions of social responsibility that are most salient--there is a strong within-category relationship. In contrast, the within-category relationship for corporate governance is weak, but CSI related to corporate governance appears to increase CSR in most other categories. Thus, when CSI concerns arise about corporate governance, companies seemingly choose to offset with CSR in other dimensions, rather than reform governance itself.

Suggested Citation

Kotchen, Matthew J. and Moon, Jon Jungbien, Corporate Social Responsibility for Irresponsibility (July 2011). NBER Working Paper No. w17254. Available at SSRN: https://ssrn.com/abstract=1898510

Matthew J. Kotchen (Contact Author)

Yale University ( email )

New Haven, CT 06520
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jon Jungbien Moon

Korea University Business School ( email )

145 Anam-ro, Seongbuk-gu
Seoul, 136-701
Korea, Republic of (South Korea)
+822 3290 2837 (Phone)

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