Board Diversity and Corporate Social Responsibility

Posted: 30 Aug 2014

See all articles by Maretno A. Harjoto

Maretno A. Harjoto

Pepperdine University - Pepperdine Graziadio Business School (PGBS)

Indrarini Laksmana

Kent State University - Department of Accounting

Robert Lee

Graziadio School of Business - Pepperdine University

Date Written: July 10, 2014

Abstract

This study examines the impact of board diversity on firms' corporate social responsibility (CSR) performance. Using seven different measures of board diversity across 1,489 U.S. firms from 1999 to 2011, the study finds that board diversity is positively associated with CSR performance. Board diversity is associated with a greater number of areas in which CSR is strong and a fewer number of areas in which CSR is a concern. These findings support the stakeholder theory and are consistent with the view that board diversity enhances firms' ability to satisfy the needs of their broader groups of stakeholders. We find that gender, tenure, and expertise diversity seems to be the driving factors of firms' CSR activities. Furthermore, we find that board diversity significantly increases CSR performance by increasing CSR strengths and reducing CSR concerns for firms producing consumer oriented products and firms operating in more competitive industries. Our results remain robust using different measures of CSR performance, different estimation methods, and different samples.

Keywords: Diversity, Corporate Social Responsibility, Board of Directors, Stakeholders

JEL Classification: M14, G34, G39

Suggested Citation

Harjoto, Maretno Agus and Laksmana, Indrarini and Lee, Robert, Board Diversity and Corporate Social Responsibility (July 10, 2014). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2479617

Maretno Agus Harjoto (Contact Author)

Pepperdine University - Pepperdine Graziadio Business School (PGBS) ( email )

Drescher Campus Suite 344
24255 Pacific Coast Highway
Malibu, CA 90263
United States
(310) 506-8542 (Phone)
(310) 506-4126 (Fax)

HOME PAGE: http://scholar.google.com/citations?hl=en&user=9-PfQi0AAAAJ

Indrarini Laksmana

Kent State University - Department of Accounting ( email )

P.O. Box 5190
Kent, OH 44242-0001
United States

Robert Lee

Graziadio School of Business - Pepperdine University ( email )

Malibu, CA
United States
310-506-8541 (Phone)
310-506-4126 (Fax)

HOME PAGE: http://bschool.pepperdine.edu/faculty/default.php?faculty=robert_lee

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