National Culture and the Value Implications of Corporate Social Responsibility
96 Pages Posted: 8 Oct 2018
Date Written: January 22, 2019
We examine why corporate social responsibility (CSR) practices vary across countries and firms, and the value implications of such variation. We find individualism is positively associated with firm-level CSR practices, with one country-level channel—income inequality—and two firm-level channels—board diversity and corporate transparency—linking individualism to CSR. Both between and within countries, we find a positive association between firm-level CSR practices and value, with three firm-level channels—cash flow, cash flow variability, and cost of equity—linking CSR practices to firm value. The positive association between firm-level CSR practices and value is stronger in more individualistic countries.
Keywords: corporate social responsibility; firm value; hierarchical linear model; individualism; national culture; environmental performance; social performance
JEL Classification: G18; G31; G32
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