Abstract
Outside of direct ownership, the general public may feel it is an implicit stakeholder of a firm. As the public becomes more vested in a firm’s actions, the firm may be more likely to engage in Corporate Social Responsibility (CSR) activities. We proxy for the public’s stake in a firm with public visibility. Based on 3400 unique newspaper publications from 1994–2008, we measure visibility for the S&P 500 firms with the frequency of print articles per year concerning the firm. We find that visibility has a signficant, positive relationship with the CSR rating. Evidence also suggests this relationship may be causal and working in one direction, from visibility to CSR. While the existing literature provides other factors that influence CSR, visibility proves to have the most significant impact when tested alongside those other factors. Visibility also has a mediating effect on the relationship between CSR rating and firm size. CSR rating and firm size relate negatively for the lowest visibility firms and positively for the highest. This paper provides strong evidence that visibility is an important factor to consider for studies on corporate social performance.
Highlights
There has been a large amount of discussion in the literature regarding the impact of corporate social responsibility (CSR) on firm financial performance
Our work demonstrates that one such group is the general public and that firms will respond to the public when people have a high awareness of a firm’s activities
The implication is that greater media visibility will continue to increase Corporate Social Responsibility, as long as firms believe it is important to the public
Summary
There has been a large amount of discussion in the literature regarding the impact of corporate social responsibility (CSR) on firm financial performance. We hand collect our data by searching the ProQuest Series Solution news search engine which provides access to over 3400 unique newspaper publications We use these data to explore whether there is a relationship between visibility and CSR and if visibility affects the strength of other factors, such as firm and executive characteristics, that could possibly affect CSR as shown in the previous literature. It presents a new opportunity for researchers to understand the antecedents and consequences of CSR in the context of corporate visibility
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