Does Social Responsibility Always Begin at Home? The Relation Between Firms’ Pension Policies and Corporate Social Responsibility (CSR) Activities

Review of Accounting Studies, Forthcoming

61 Pages Posted: 3 Jul 2021

See all articles by Divya Anantharaman

Divya Anantharaman

Rutgers, The State University of New Jersey - Accounting & Information Systems

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Hariom Manchiraju

Indian School of Business (ISB), Hyderabad

Date Written: June 21, 2021

Abstract

Pension freezes are highly visible corporate actions with the potential to hurt the firms’ reputation as a “responsible” employer. We document that firms sponsoring defined-benefit pensions step up CSR engagement following announcements of defined-benefit pension freezes. Freeze firms also increase their usage of CSR-related keywords in public disclosures following the freeze. We find a stronger CSR response to relatively more severe freezes, to more controversial cash-balance conversions, and in larger sponsors. This is consistent with CSR increases being motivated by the need for reputation-repair. We also find that CSR increases following an accounting rule change that makes pension deficits more visible. Collectively, our findings highlight an important driver of CSR: the need to restore or manage reputation, especially in the face of corporate actions that can hurt stakeholders.

Keywords: Pension Freezes, Pension Funding, Corporate Social Responsibility, Corporate Reputation

Suggested Citation

Anantharaman, Divya and Gao, Feng and Manchiraju, Hariom, Does Social Responsibility Always Begin at Home? The Relation Between Firms’ Pension Policies and Corporate Social Responsibility (CSR) Activities (June 21, 2021). Review of Accounting Studies, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3871192 or http://dx.doi.org/10.2139/ssrn.3871192

Divya Anantharaman (Contact Author)

Rutgers, The State University of New Jersey - Accounting & Information Systems ( email )

1 Washington Park
#916
Newark, NJ 07102
United States

Feng Gao

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

Janice H. Levin Bldg., Room 121
94 Rockafeller Road
Piscataway, NJ 08854-8054
United States

Hariom Manchiraju

Indian School of Business (ISB), Hyderabad ( email )

Hyderabad, Gachibowli 500 019
India

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