Crime, Punishment and the Value of Corporate Social Responsibility

44 Pages Posted: 6 Sep 2014 Last revised: 2 Oct 2019

See all articles by Harrison G. Hong

Harrison G. Hong

Columbia University, Graduate School of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Jeffrey D. Kubik

Syracuse University - Department of Economics

Inessa Liskovich

University of Texas at Austin - Department of Finance

José Scheinkman

Columbia University; Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2019

Abstract

Using enforcements of the Foreign Corrupt Practices Act, we test the hypothesis that socially responsible (ESG) firms receive lower sanctions from prosecutors. Since virtually all cases are settled by bargaining, we estimate sanction specifications derived from a Nash Bargaining model. To account for ESG firm bribes potentially being unobservably less egregious, we instrument ESG with regulation pages in the state of the firm's headquarters. Our instrumented estimates point to ESG firms receiving 14.3 million dollars or 65% lower sanctions, all else equal. Consistent with our exclusion restriction, pages of state laws are uncorrelated with revenues from bribes.

Keywords: Corporate Social Responsibility, Foreign Corrupt Practices Act, Halo Effect

JEL Classification: D2, D21, D6, D63, D64, G3, G30, G38, K3, K30, K42, M1, M14, M3, M37

Suggested Citation

Hong, Harrison G. and Kubik, Jeffrey D. and Liskovich, Inessa and Scheinkman, José, Crime, Punishment and the Value of Corporate Social Responsibility (October 1, 2019). Available at SSRN: https://ssrn.com/abstract=2492202 or http://dx.doi.org/10.2139/ssrn.2492202

Harrison G. Hong (Contact Author)

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Jeffrey D. Kubik

Syracuse University - Department of Economics ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-9063 (Phone)
315-443-1081 (Fax)

Inessa Liskovich

University of Texas at Austin - Department of Finance ( email )

Red McCombs School of Business
Austin, TX 78712
United States

José Scheinkman

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Princeton University - Department of Economics ( email )

26 Prospect Avenue
Princeton, NJ 08544
United States
609-258-4020 (Phone)
609-258-6419 (Fax)

HOME PAGE: http://www.princeton.edu/~joses

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
1,257
Abstract Views
8,254
rank
14,705
PlumX Metrics