The Value of Corporate Citizenship: Protection

44 Pages Posted: 28 Aug 2015

See all articles by Dylan Minor

Dylan Minor

Anderson School of Management (UCLA)

Date Written: August 1, 2015


We explore the notion that corporate citizenship, as obtained through Corporate Social Responsibility (CSR), is used by managers to protect firm value, helping their firm better withstand negative business shocks. We formally explore two parallel mechanisms for such protection .one of building moral capital (CSR Contributions) and another of improving investor posteriors (CSR Investments). We find some theoretical and empirical support for both of these, but in different settings. In particular, we find that firms with higher CSR Investments enjoy an average of $1 billion of saved firm value upon an adverse event. In contrast, CSR Contribution firms lose value (on average) upon an event, possibly due to disingenuous contributions. Meanwhile, due to managerial moral hazard, firms with high levels of CSR Contributions face adverse events more often, whereas those with high levels of CSR Investments face them less often.

JEL Classification: G30, G32, G39

Suggested Citation

Minor, Dylan, The Value of Corporate Citizenship: Protection (August 1, 2015). Harvard Business School Strategy Unit Working Paper No. 16-021, Available at SSRN: or

Dylan Minor (Contact Author)

Anderson School of Management (UCLA) ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

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