Crime, Punishment and the Halo Effect of Corporate Social Responsibility

47 Pages Posted: 1 Jun 2015

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)

Inessa Liskovich

University of Texas at Austin - Department of Finance

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Date Written: May 2015

Abstract

Three reasons are often cited for the value of corporate social responsibility: product quality signalling, delegated giving, and the halo effect. Previous tests cannot separate these channels because they focus on consumers, who value all three. We focus on prosecutors, who are only susceptible to the halo effect. Using Foreign Corrupt Practices Act enforcements, we find that social responsibility is associated with 2 million dollars less in fines, though it is uncorrelated with bribe characteristics and cooperation, which should entirely determine sanctions following Becker (1974). We show that this bias is likely a halo effect and not prosecutorial conflict of interest.

Suggested Citation

Hong, Harrison G. and Liskovich, Inessa, Crime, Punishment and the Halo Effect of Corporate Social Responsibility (May 2015). NBER Working Paper No. w21215. Available at SSRN: https://ssrn.com/abstract=2612770

Harrison G. Hong (Contact Author)

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

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New York, NY 10027
United States

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Inessa Liskovich

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

Red McCombs School of Business
Austin, TX 78712
United States

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