Do Shareholders Prefer Political Connectedness or Corporate Social Responsibility?: Evidence from Letting Trump Be Trump

41 Pages Posted: 21 Jul 2018  

Kelly Carter

Morgan State University - Department of Accounting and Finance

Date Written: June 25, 2018

Abstract

I find evidence that shareholders prefer political connectedness to corporate social responsibility (CSR). Choosing political connectedness with President Trump over CSR causes shareholder value to increase by $345 million per firm, on average. However, choosing CSR over political connectedness with Trump causes shareholders to lose $570 million on average, and as much as $1.8 billion, per firm. These results reveal an asymmetric response to the choice between political connectedness and CSR and support the view that CSR is an agency problem. Spillover also exists, as rival firms typically incur wealth gains (losses) when main firms choose political connectedness (CSR).

Keywords: Political Connectedness, Corporate Social Responsibility, Corporate Sustainability, CEO Departures, President Donald Trump, Manufacturing Jobs Initiative, Strategic and Policy Forum

JEL Classification: D72, G14, G34, P14, P16

Suggested Citation

Carter, Kelly, Do Shareholders Prefer Political Connectedness or Corporate Social Responsibility?: Evidence from Letting Trump Be Trump (June 25, 2018). Available at SSRN: https://ssrn.com/abstract=3202561 or http://dx.doi.org/10.2139/ssrn.3202561

Kelly Carter (Contact Author)

Morgan State University - Department of Accounting and Finance ( email )

Baltimore, MD 21251
United States
(443) 885-4472 (Phone)
(443) 885-8251 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
104
rank
239,541
Abstract Views
601
PlumX