Does It Pay to Outclass? Corporate Social Responsibility and Its Impact on Firm Value

41 Pages Posted: 22 Aug 2014

See all articles by David K. Ding

David K. Ding

Singapore Management University - Lee Kong Chian School of Business; Massey University - School of Economics and Finance

Christo Ferreira

Massey University

Udomsak Wongchoti

Massey University - School of Economics and Finance

Date Written: August 21, 2014

Abstract

We show that conventional aggregation of corporate social responsibility (CSR) raw scores and its interpreted impact on firm value is less than reliable. Instead, the value impact of CSR activities relies heavily on the industry-specific relative position of the firm. Firms that distinguish themselves over their peers are associated with an increased value. This finding is robust and holds for both responsible and irresponsible behavior. Information concerns and portfolio construction allude to a possible CSR clientele, suggesting the existence of an optimal CSR level. Our peer-effect results are robust to unobserved heterogeneity.

Keywords: Corporate Social Responsibility, CSR, Corporate Governance, Firm Value, Stakeholder, Asset Pricing, Environmental

JEL Classification: G10, G32

Suggested Citation

Ding, David K. and Ferrreira, Christoffel Jacobus and Wongchoti, Udomsak, Does It Pay to Outclass? Corporate Social Responsibility and Its Impact on Firm Value (August 21, 2014). Available at SSRN: https://ssrn.com/abstract=2484901 or http://dx.doi.org/10.2139/ssrn.2484901

David K. Ding (Contact Author)

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

50 Stamford Road
Singapore, 178899
Singapore
+65 6828-0245 (Phone)

Massey University - School of Economics and Finance ( email )

Auckland
New Zealand

Christoffel Jacobus Ferrreira

Massey University ( email )

Private Bag 11 222
Palmerston North, Manawatu 4442
New Zealand

Udomsak Wongchoti

Massey University - School of Economics and Finance ( email )

Private Bag 11-222
Palmerston North, 30974
New Zealand

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