Socially Responsible Firms
69 Pages Posted: 12 Jul 2014 Last revised: 5 Aug 2016
There are 2 versions of this paper
Socially Responsible Firms
Socially Responsible Firms
Date Written: August 2016
Abstract
In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.
Keywords: Corporate social responsibility, agency costs, corporate governance
JEL Classification: G30, G31, G35, K22, L21, M14
Suggested Citation: Suggested Citation