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Socially responsible firms
Ferrell,A. Liang,Hao Renneboog,Luc
Ferrell,A.
Liang,Hao
Renneboog,Luc
Abstract
In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.
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Date
2016-12
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Keywords
corporate social responsibility, agency costs, corporate governance, G30 - General, G31 - Capital Budgeting ; Fixed Investment and Inventory Studies ; Capacity, G35 - Payout Policy, K22 - Business and Securities Law, L21 - Business Objectives of the Firm, M14 - Corporate Culture ; Diversity ; Social Responsibility
Citation
Ferrell, A, Liang, H & Renneboog, L 2016, 'Socially responsible firms', Journal of Financial Economics, vol. 122, no. 3, pp. 585-606. https://doi.org/10.1016/j.jfineco.2015.12.003