Crime, Punishment and the Value of Corporate Social Responsibility
62 Pages Posted: 6 Sep 2014 Last revised: 22 Mar 2016
Date Written: March 21, 2016
Using enforcements of the Foreign Corrupt Practices Act, we find that socially responsible firms receive more lenient settlements from prosecutors and have higher resulting market valuations. Corporate social responsibility (CSR) is uncorrelated with bribe attributes, which should entirely determine sanctions following Becker (1974). It is also not an explicit factor in sentencing guidelines. Yet, a one standard deviation increase in CSR is associated with 5 million dollars less in fines, or 25% lower than the mean and less costly subsequent monitoring. High CSR firms out-perform low CSR firms by 2.4% in the six months following the announcement of the settlement.
Keywords: Corporate Social Responsibility, Foreign Corrupt Practices Act
JEL Classification: D2, D21, D6, D63, D64, G3, G30, G38, K3, K30, K42, M1, M14, M3, M37
Suggested Citation: Suggested Citation