Value relevance of multifaceted corporate social performance: how do country-specific factors matter?

Abstract

This study examines the relationship between multidimensional corporate social performance (CSP) and shareholder value, considering the moderating impacts of country-specific factors: economic development, the political system, and culture. Based on a sample of public companies in Asian-Pacific emerging countries over the 2010–2020 period, the findings reveal that the aggregate CSP measure obscures the valuation effect, whereas individual CSP dimensions highlight positive valuation effects. The CSP valuation effect varies across dimensions aimed at different stakeholder groups. Notably, narrowly focused CSP dimensions (community, product responsibility, and workforce) demonstrate more pronounced valuation effects than broadly focused dimensions (human rights). Given CSP’s multifaceted nature, directing attention toward the aggregate measure or incorrect dimensions may yield unwarranted conclusions. To enhance shareholder value through CSP, importance-performance analysis suggests prioritized resource allocation to human rights, community, product responsibility, and workforce dimensions. Intriguingly, the positive valuation effect of CSP is amplified in countries with higher income-per-capita and lower corruption, indicative of economic development and a robust political system, respectively. However, humane orientation—a cultural proxy—exerts no moderating impact on the CSP-shareholder value relationship. Comprehending the moderating roles of country-specific factors bears significant implications for bolstering CSP across diverse global regions.