Does Religious Piety Inspire Corporate Social Responsibility (CSR)? Evidence from Historical Religious Identification

16 Pages Posted: 4 Apr 2014  

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Pattanaporn Chatjuthamard

Sasin GIBA

Shenghui Tong

Central University of Finance and Economics (CUFE)

Date Written: April 1, 2014

Abstract

We explore the effect of religious piety on corporate social responsibility (CSR). Prior research links religion to honesty and risk aversion. Accordingly, religion induces managers to be more honest and likely view as opportunistic and unethical an exploitation of other stakeholders. Risk aversion also implies that managers are unlikely to take advantage of other stakeholders as stakeholders can take retaliatory actions against them. Religion therefore motivates managers to treat other stakeholders and the society at large more favorably, resulting in stronger CSR. Our evidence, based on over 17,000 observations across 16 years, shows that religious piety leads to stronger CSR. However, this is the case only when religious piety is sufficiently strong, i.e. when it is beyond a certain threshold. To draw a causal inference, we use as our instruments religious piety in the distant past, i.e. from 1971 and 1952. Religious piety from decades ago is unlikely correlated with current CSR, except through its impact on contemporaneous piety. Our instrumental-variable analysis shows that the effect of religion on CSR is likely causal.

Keywords: religion, corporate social responsibility, CSR, religious piety, instrumental variable

JEL Classification: G30, M14, Z12

Suggested Citation

Jiraporn, Pornsit and Chatjuthamard, Pattanaporn and Tong, Shenghui, Does Religious Piety Inspire Corporate Social Responsibility (CSR)? Evidence from Historical Religious Identification (April 1, 2014). Available at SSRN: https://ssrn.com/abstract=2419312 or http://dx.doi.org/10.2139/ssrn.2419312

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Pattanaporn Chatjuthamard

Sasin GIBA ( email )

Bangkok
Thailand

Shenghui Tong

Central University of Finance and Economics (CUFE) ( email )

39 South College Road
Haidian District
Beijing, Beijing 100081
China

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