On the Foundations of Corporate Social Responsibility

59 Pages Posted: 30 Nov 2013 Last revised: 5 Aug 2016

See all articles by Hao Liang

Hao Liang

Singapore Management University - Lee Kong Chian School of Business

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Multiple version iconThere are 3 versions of this paper

Date Written: August 2016


A firm’s corporate social responsibility (CSR) practice and its country’s legal origin are strongly correlated. This relation is valid for various CSR ratings coming from several large datasets that comprise more than 23,000 large companies from 114 countries. We find that CSR is more strongly and consistently related to legal origins than to “doing good by doing well”-factors, and most firm and country characteristics such as ownership concentration, political institutions, and degree of globalization. In particular, companies from common law countries have lower level of CSR than companies from civil law countries, and Scandinavian civil law firms assume highest level of CSR. This link between legal origins and CSR seems to be explained by differences in ex post shareholder litigation risk as well as in stakeholder regulations and state involvement in the economy. Evidence from quasi-natural experiments such as scandals and natural disasters suggest that civil law firms are more responsive to CSR shocks than common law firms, and such responsiveness is not likely driven by declining market shares following the shock.

Keywords: Corporate social responsibility, legal origins, stakeholder orientation, firm value

JEL Classification: G30, K22, M14, O10, O57

Suggested Citation

Liang, Hao and Renneboog, Luc, On the Foundations of Corporate Social Responsibility (August 2016). European Corporate Governance Institute (ECGI) - Finance Working Paper No. 394/2013. Available at SSRN: https://ssrn.com/abstract=2360633 or http://dx.doi.org/10.2139/ssrn.2360633

Hao Liang (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409

HOME PAGE: http://business.smu.edu.sg/faculty/profile/130396/LIANG-Hao

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

B-1050 Brussels

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE

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