National Culture and the Value Implications of Corporate Social Responsibility
107 Pages Posted: 8 Oct 2018 Last revised: 2 Nov 2019
Date Written: October 31, 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 two country-level channels—press freedom and income inequality—and three firm-level channels—managerial discretion, board diversity, and corporate transparency—linking individualism to CSR. We find a positive association between firm-level CSR practices and value, with three firm-level channels—cash flows, 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; internationalization; environmental performance; social performance
JEL Classification: G18; G31; G32
Suggested Citation: Suggested Citation