The Dark Side of Corporate Social Responsibility: The Case of Director Information Acquisition

53 Pages Posted: 14 Feb 2020

See all articles by Chunbo Liu

Chunbo Liu

Institute of Financial Studies, Southwestern University of Finance and Economics

Yongxin Xu

Monash University; Monash University

Date Written: August 1, 2019

Abstract

Using the staggered enactment of state-level constituency statutes as an exogenous shock to corporate social responsibility, we find that directors’ information acquisition intensity, measured by the return for their trading of company shares, decreases by 4% after the enactment. Our results are consistent with the argument that allowing directors to consider stakeholders’ interests makes directors less accountable. We further show that the effect is more pronounced when directors either have less incentive to collect information or it is more costly to do so. Last, less informed directors seem to be less effective monitors but not less effective advisors.

Keywords: Corporate social responsibility; Constituency statutes; Board of directors; Information acquisition

JEL Classification: G30, M14

Suggested Citation

Liu, Chunbo and Xu, Yongxin, The Dark Side of Corporate Social Responsibility: The Case of Director Information Acquisition (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=3523024 or http://dx.doi.org/10.2139/ssrn.3523024

Chunbo Liu (Contact Author)

Institute of Financial Studies, Southwestern University of Finance and Economics ( email )

55 Guanghuacun Street
Qingyang area
Chengdu, Sichuan 610074
China

Yongxin Xu

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Monash University ( email )

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