Exploring How Independent Directors View CSR Inequality Using A Quasi-Natural Experiment

31 Pages Posted: 30 Sep 2020

See all articles by Viput Ongsakul

Viput Ongsakul

NIDA Business School, National Institute of Development Administration (NIDA)

Napatsorn (Pom) Jiraporn

State University of New York (SUNY) - State University of New York (SUNY) at Oswego

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Date Written: August 15, 2020

Abstract

Purpose: Our purpose is to explore CSR inequality, which is the inequality across different CSR categories. Higher inequality suggests a less balanced CSR policy. To determine if CSR inequality is beneficial or harmful, we investigate how independent directors view CSR inequality, using an exogenous regulatory shock introduced by the passage of the Sarbanes-Oxley Act.

Design: To draw causality, we rely on a quasi-natural experiment based on an exogenous regulatory shock that forced certain firms to raise board independence. This approach is significantly less vulnerable to endogeneity and is much more likely to show a causal effect. We also confirm our results using propensity score matching, principal component analysis, and instrumental-variable analysis.

Findings: Our difference-in-difference estimates show that independent directors view CSR inequality unfavorably. Specifically, board independence diminishes CSR inequality by approximately 34-43%. Because our empirical strategy is based on a quasi-natural experiment, our results are more likely to show causality. Our results also imply that CSR inequality is a crucially important aspect of CSR.

Originality: Although a substantial volume of research has examined CSR, one vital aspect of CSR has been largely unexplored. Filling this void in the literature, we investigate CSR inequality. Our study is the first to explore how independent directors view CSR inequality using a quasi-natural experiment.

Keywords: CSR, board independence, independent directors, corporate social responsibility

JEL Classification: G33

Suggested Citation

Ongsakul, Viput and Jiraporn, Napatsorn (Pom) and Jiraporn, Pornsit, Exploring How Independent Directors View CSR Inequality Using A Quasi-Natural Experiment (August 15, 2020). Available at SSRN: https://ssrn.com/abstract=3674355 or http://dx.doi.org/10.2139/ssrn.3674355

Viput Ongsakul

NIDA Business School, National Institute of Development Administration (NIDA) ( email )

118 Seri Thai Road
Bangkok, 10240
Thailand

Napatsorn (Pom) Jiraporn

State University of New York (SUNY) - State University of New York (SUNY) at Oswego ( email )

7060 NY-104
Oswego, NY 13126-3599
United States

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

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