Abstract
Corporate social responsibility (CSR) is a subject that has garnered considerable attention in recent years. This study conducts the empirical study by using a real options perspective to examine whether a company’s CSR commitment tends to increase its market value. According to Taiwan’s CommonWealth Magazine, this study distinguishes CSR and non-CSR companies. The paper estimates and compares the real options values of CSR and non-CSR companies and shows that high percentage of the company value is attributed to real options. This study finds that a company’s commitment to fulfilling its social responsibility increases its real options value and that the higher the number of CSR Awards won by a company, the higher its real options value. Compared with 10 years ago, investors now pay more attention to companies’ CSR performance. In addition, the higher a company’s size, systematic risk, fixed asset ratio, debt ratio, or skewness in stock returns, the higher a real options value is likely to be.
Highlights
A concept of corporate social responsibility (CSR) has been widely discussed in international forums
This study finds that a company’s commitment to fulfilling its social responsibility increases its real options value and that the higher the number of Corporate social responsibility (CSR) Awards won by a company, the higher its real options value
(1) To estimate the real options values of CSR companies and compare them with non-CSR companies. (2) Using a panel data regression model to analyse the effect of CSR on company value of real options. (3) To examine whether investors have paid more attention to CSR companies in recent years
Summary
A concept of corporate social responsibility (CSR) has been widely discussed in international forums. The advantageous effects of CSR on company value are both tangible and intangible; the intangible effects include enhancing company reputation, improving companies’ relationships with stakeholders, earning the trust of investors, increasing companies’ resource usage efficiency, and boosting companies’ innovation abilities (Fombrun, Gardberg, & Barnett, 2000; Porter & van der Linde, 1995) These favourable results may influence investors’ assessments of the companies’ future growth potential and thereby increase the companies’ intangible value. This paper, uses empirical data to investigate the effects of CSR on market value of a real options perspective. The effect of CSR on company market value based on a real options perspective is examined. (2) Using a panel data regression model to analyse the effect of CSR on company value of real options (the results will be shown in Table 3 of Section 4).
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