Which Aspects of CSR Predict Firm Market Value?

Bajic, S. and Yurtoglu, B. (2018), "Which aspects of CSR predict firm market value?", Journal of Capital Markets Studies, Vol. 2 No. 1, pp. 50-69.

23 Pages Posted: 1 Oct 2021

See all articles by Stevan Bajic

Stevan Bajic

WHU - Otto Beisheim School of Management

B. Burcin Yurtoglu

WHU - Otto Beisheim School of Management

Date Written: February 28, 2018

Abstract

Note: This paper is a pre-publication version of "Bajic, S. and Yurtoglu, B. (2018), "Which aspects of CSR predict firm market value?", Journal of Capital Markets Studies, Vol. 2 No. 1, pp. 50-69. https://doi.org/10.1108/JCMS-10-2017-0002"

There is evidence that corporate social responsibility (CSR) practices predict higher firm value, but little evidence on which specific aspects of CSR drive this relationship. We study this question in a sample drawn from 35 countries over 2003-2016 and find an economically significant relationship between our overall CSR measure and firm value. The overall CSR score builds on data from Asset 4 and is comprised of three indices for environmental, social, and corporate governance aspects of CSR. We find that the social index consistently predicts higher market value. We also show that the use of particular elements of CSR can lead to substantial omitted variables bias (OVB) when predicting firm value. Hence, the results of empirical studies that focus on a single index, which captures a specific aspect of CSR and omits the remaining aspects, should be interpreted with caution.

Keywords: Corporate social responsibility, Environmental performance, social performance, corporate governance, firm value, ESG, firm performance, international comparison

JEL Classification: C10, G11, G15

Suggested Citation

Bajic, Stevan and Yurtoglu, B. Burcin, Which Aspects of CSR Predict Firm Market Value? (February 28, 2018). Bajic, S. and Yurtoglu, B. (2018), "Which aspects of CSR predict firm market value?", Journal of Capital Markets Studies, Vol. 2 No. 1, pp. 50-69., Available at SSRN: https://ssrn.com/abstract=3914004 or http://dx.doi.org/10.2139/ssrn.3914004

Stevan Bajic

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

B. Burcin Yurtoglu (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Chair of Corporate Finance
Burgplatz 2
Vallendar, 56179
Germany
+49 261 6509-721 (Phone)
+49 261 6509-729 (Fax)

HOME PAGE: http://www.whu.edu/forschung/fakultaet/finance-group/corporate-finance/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
132
Abstract Views
548
rank
311,877
PlumX Metrics