Does It Pay to Outclass? Corporate Social Responsibility and Its Impact on Firm Value
41 Pages Posted: 22 Aug 2014
Date Written: August 21, 2014
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: Suggested Citation