Abstract
Using Corporate Social responsibility (CSR) scores compiled by the Boost Awards international company for 77 UK companies listed on the FTSE100, the paper explores the impact of CSR on companies' cash and investment decisions. The analysis is based on the system-GMM estimation methodology, spanning the period 2006 to 2019. The empirical analysis provides direct evidence that suggests that CSR award is directly and positively associated with corporate cash holdings, with such awards also having a positive effect on corporate investment decisions. The findings survive certain robustness tests in relevance to the distinction between mature and growth firms, although they are stronger in the case of the growth firms, and an alternative definition of CSR. The findings seem to be highly important for company managers and investors. Managers in awarded CSR firms with better investment opportunities tend to hold more cash because financial distress is more costly for their firms. In addition, firms with more cash holdings are less likely to default their financial obligations, hence this evidence also implies that investors may give priority to invest in such high-performance CSR firms.
Published Version
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