Why Do Countries Matter so Much in Corporate Social Performance?

53 Pages Posted: 26 Sep 2016

See all articles by Ye Cai

Ye Cai

Santa Clara University - Leavey School of Business

Carrie H. Pan

Santa Clara University - Department of Finance

Meir Statman

Santa Clara University - Department of Finance

Date Written: September 26, 2016

Abstract

Why do levels of corporate social performance (CSP) differ so much across countries? We answer this question in an examination of CSP ratings of more than 2,600 companies from 36 countries. We find that firm characteristics explain very little of the variations in CSP ratings. In contrast, variations in country factors such as stages of economic development, culture, and institutions account for a significant proportion of variations in CSP ratings across countries. In particular, we find that CSP ratings are high in countries with high income-per-capita, strong civil liberties and political rights, and cultures oriented toward harmony and autonomy. Furthermore, we find that home country factors explain a smaller portion of the overall variations in CSP for multinationals and cross-listed firms than for non-multinationals and pure domestic firms, respectively.

Keywords: Corporate social performance; Culture; International analyses; Country factors

JEL Classification: G30; M14

Suggested Citation

Cai, Ye and Pan, Carrie H. and Statman, Meir, Why Do Countries Matter so Much in Corporate Social Performance? (September 26, 2016). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2843392

Ye Cai (Contact Author)

Santa Clara University - Leavey School of Business ( email )

500 El Camino Real
Santa Clara, CA California 95053
United States

Carrie H. Pan

Santa Clara University - Department of Finance ( email )

Santa Clara, CA 95053
United States
(408)5517188 (Phone)

Meir Statman

Santa Clara University - Department of Finance ( email )

500 El Camino Real
Santa Clara, CA 95053
United States
408-554-4147 (Phone)
408-554-4029 (Fax)

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