Do Socially Responsible Firms Walk the Talk?

45 Pages Posted: 18 Jun 2020 Last revised: 2 Apr 2021

See all articles by Aneesh Raghunandan

Aneesh Raghunandan

London School of Economics

Shivaram Rajgopal

Columbia University - Columbia Business School, Accounting, Business Law & Taxation

Date Written: April 1, 2021


Several firms claim to be socially responsible. We confront these claims with the data using the most notable such proclamation in recent years, the August 2019 Statement on the Purpose of a Corporation by the Business Roundtable (BRT). The BRT is a large, deeply influential business group containing many of America’s largest firms; the 2019 Statement proclaimed that a corporation’s purpose is to deliver value to all stakeholders, rather than to solely maximize shareholder value. However, we find no evidence that BRT members – who voluntarily signed the Statement – have engaged in such stakeholder-centric practices. Relative to within-industry peer firms, publicly listed signatories of the BRT statement commit environmental and labor-related compliance violations more often (and pay more in compliance penalties), have higher carbon emissions, and rely more on government subsidies. BRT firms are also more likely to disagree with proxy recommendations on shareholder proposals. Preliminary evidence from the period subsequent to the signing of the Statement suggests that signatories did not sign the document as a credible signal of a future intention to improve stakeholder-centric behaviors. Our results suggest that firms’ proclamations of stakeholder-centric behavior are not backed up by any hard data on these firms’ operations.

Keywords: social responsibility, ESG, Business Roundtable, environmental and labor laws, Violation Tracker, carbon emissions.

JEL Classification: M14, G23, G34

Suggested Citation

Raghunandan, Aneesh and Rajgopal, Shivaram, Do Socially Responsible Firms Walk the Talk? (April 1, 2021). Available at SSRN: or

Aneesh Raghunandan (Contact Author)

London School of Economics ( email )

United Kingdom

Shivaram Rajgopal

Columbia University - Columbia Business School, Accounting, Business Law & Taxation ( email )

3022 Broadway
New York, NY 10027
United States

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