National Culture and the Value Implications of Corporate Social Responsibility

96 Pages Posted: 8 Oct 2018

See all articles by Dale W. Griffin

Dale W. Griffin

University of British Columbia (UBC) - Division of Marketing

Omrane Guedhami

University of South Carolina - Moore School of Business

Kai Li

University of British Columbia (UBC) - Sauder School of Business; China Academy of Financial Research (CAFR)

Guangli Lu

University of British Columbia, Sauder School of Business

Date Written: September 15, 2018

Abstract

We examine why corporate social responsibility (CSR) practices vary across countries and firms, and the value implications of such variation. Using Thomson Reuters’ ASSET4 database on the CSR practices of 4,279 firms from 49 countries over 2003–2015 and employing a hierarchical linear model, we find that the national cultural dimension of individualism is positively associated with firm-level CSR practices. We further find that income inequality at the country level and board diversity and corporate transparency at the firm level link individualism to CSR practices. Moreover, both between and within countries, we find a positive association between firm-level CSR practices and firm value, with three firm-level channels — cash flow, cash flow variability, and cost of equity — linking CSR practices to firm value. Finally, we find that the positive association between firm-level CSR practices and firm value is stronger in more individualistic countries.

Keywords: Corporate Social Responsibility; Firm Value; Hierarchical Linear Model; Individualism; National Culture; Environmental Commitments; Social Commitments

JEL Classification: G18; G31; G32

Suggested Citation

Griffin, Dale W. and Guedhami, Omrane and Li, Kai and Lu, Guangli, National Culture and the Value Implications of Corporate Social Responsibility (September 15, 2018). Available at SSRN: https://ssrn.com/abstract=3250222 or http://dx.doi.org/10.2139/ssrn.3250222

Dale W. Griffin

University of British Columbia (UBC) - Division of Marketing ( email )

Canada

Omrane Guedhami

University of South Carolina - Moore School of Business ( email )

Columbia, SC
United States

Kai Li (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8353 (Phone)
604-822-4695 (Fax)

HOME PAGE: http://finance.sauder.ubc.ca/~kaili

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

Guangli Lu

University of British Columbia, Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
6045069229 (Phone)

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