The Information Value of Corporate Social Responsibility

56 Pages Posted: 12 Feb 2018 Last revised: 1 Oct 2019

See all articles by Kose John

Kose John

New York University (NYU) - Department of Finance

Jongsub Lee

University of Florida - Warrington College of Business Administration

Ji Yeol Jimmy Oh

Hanyang University

Date Written: April 12, 2018

Abstract

Using a simple cheap-talk game, we theoretically demonstrate that corporate social responsibility (CSR) helps mitigate the CEO-board information asymmetry, leading to more informed advising and monitoring by the board. By optimally engaging in CSR, the board can take advantage of stakeholder information revelation and reduce its informational dependence on the CEO, which enables the shareholders to choose an ex ante higher level of board independence. For a sample of U.S. firms between 1999 and 2013, we find strong support for this strategic complementarity between board independence and the information value of CSR. Our results highlight a novel rationale for CSR – the information motive.

Keywords: Corporate social responsibility, stakeholder information revelation, cheap-talk game, endogenous information acquisition

JEL Classification: D8, G3, M14

Suggested Citation

John, Kose and Lee, Jongsub and Oh, Ji Yeol Jimmy, The Information Value of Corporate Social Responsibility (April 12, 2018). Proceedings of Paris December 2019 Finance Meeting EUROFIDAI - ESSEC, Available at SSRN: https://ssrn.com/abstract=3119039 or http://dx.doi.org/10.2139/ssrn.3119039

Kose John (Contact Author)

New York University (NYU) - Department of Finance ( email )

Stern School of Business
44 West 4th Street
New York, NY 10012-1126
United States
212-998-0337 (Phone)
212-995-4233 (Fax)

Jongsub Lee

University of Florida - Warrington College of Business Administration ( email )

Department of Finance Insurance & Real Estate
P.O. Box 117168
Gainesville, FL 32611-7168
United States
352-273-4966 (Phone)
352-392-0301 (Fax)

Ji Yeol Jimmy Oh

Hanyang University ( email )

School of Business #513
Wangsimni-ro 222, Seongdong-gu
Seoul, Seoul 04763
Korea, Republic of (South Korea)
+82222202689 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
337
Abstract Views
2,072
rank
97,279
PlumX Metrics