Is Privatization a Socially Responsible Reform?
55 Pages Posted: 22 Feb 2016 Last revised: 25 Jan 2019
Date Written: January 23, 2019
We assess the link between corporate social responsibility (CSR) and government ownership using a unique sample of privatized firms (PFs) from 41 countries over the 2002 to 2014 period. We find that PFs have, on average, better CSR intensity than other publicly listed firms. Further tests show a nonlinear relation between residual state ownership and CSR intensity 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 intensity relation, and PFs 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