Is Privatization a Socially Responsible Reform?
50 Pages Posted: 22 Feb 2016 Last revised: 17 Jun 2018
Date Written: March 15, 2016
We assess the link between corporate social responsibility (CSR) and government ownership using a unique sample of newly privatized firms (NPFs) from 41 countries over the 2002 to 2014 period. We find that NPFs have, on average, better CSR performance than other publicly listed firms. Further tests show a nonlinear relation between residual state ownership and CSR performance that depends on the trade-off between political objectives of the government and profit maximization objectives of private owners. In addition, country-level institutions affect the state ownership–CSR performance relation, and NPFs benefit from higher valuation and lower equity financing costs through improved CSR.
Keywords: Privatization, Corporate Social Responsibility (CSR), Ownership Structure, Institutions
JEL Classification: G32, G34
Suggested Citation: Suggested Citation