Corporate Social Responsibility Engagement Research Articles

The effect of academic top executives on corporate social responsibility: potential motivation and its outcomes

This paper investigates whether there is ethical or opportunistic motivation behind academic top executives’ (ATEs) engagement in corporate social responsibility (CSR) by exploring how ATEs relate to CSR practices and their consequences on corporate misbehavior and performance. We find that firms run by ATEs invest more in CSR. Moreover, CSR firms with ATEs are unlikely to be involved in corporate fraud and aggressive tax avoidance, especially when firms have low institutional ownership and fewer analysts and are located in low law enforcement and socially dishonest environments. We also document that the CSR performance brought by ATEs is positively associated with subsequent firm performance. Overall, our study suggests that academic experience has important implications for understanding executives’ ethical leadership and driving firms’ ethical CSR.

Do Old Board Directors Promote Corporate Social Responsibility?

AbstractThis study investigates the influence of old directors on corporate social responsibility (CSR) using roughly 25,000 firm-year observations from 2001 to 2015 in the United States. We employ the widely used selection, optimization, and compensation (SOC) model from psychology to explain the CSR decisions of old directors. Our results indicate that firms with a higher percentage of old directors tend to have lower engagement in CSR activities. To address endogeneity, we adopt the difference-in-differences method and use the event of sudden deaths and unexpected retirements of old directors and find that our results remain robust. Our analysis also reveals that the negative impact of old directors on CSR is more significant in firms where directors receive fewer reputational spillover benefits from CSR initiatives and/or firms exhibiting poor corporate governance. In addition, this adverse impact of old directors comes from two effects: a reduction in efforts to enhance CSR strengths and an increase in inaction to address CSR concerns. Overall, these findings suggest that the CSR decision-making process of old directors involves assessing the costs and benefits of CSR engagements, consistent with our hypothesis derived from the SOC model.

Evaluating the Relationship between Corporate Social Responsibility Incentives and Financial Outcomes of Corporations Operating in the GCC Region

Corporate Social Responsibility (CSR) is a concept that has gained traction in strategic management over the years, and it is continuously being cited as important for both the business and the business shareholders. Although there is much research examining the general CSR-CFP relationship, there is very little, if any, research that investigates the firms operating in GCC countries, which is the main objective of this study. One of the new methods used to measure Corporate Social Responsibility engagement in any organisation is the ESG rating. The ESG rating measures the Environmental, Social and Governance (ESG) dimensions of Corporative Social Responsibility engagement. This research uses the stakeholder theory framework, together with the agency theory framework to find the impact that CSR has on the financial performance of organisations. In the research, we used annual data of ESG and financial ratios of 98 publicly listed firms operating in the Gulf Cooperation Council, from 2008 to 2018. Regression analysis was used to test the impact of ESG scores on the financial performance of organisations. According to the results, the Environmental, Social, and Governance dimensions have a significant impact on the financial performance of organisations operating in the Gulf Cooperation Council. This study contributes to the body of knowledge on the relationship between CSR performance and Financial Performance.

What Is the Relationship between Corporate Social Responsibility and Financial Performance in the UK Banking Sector?

This study rigorously investigates the intricate dynamics between Corporate Social Responsibility (CSR), quantified through Environmental, Social, and Governance (ESG) scores, and financial performance (FP), measured via the return on assets (ROA) and return on equity (ROE), within the UK banking sector. Our analysis is based on a comprehensive dataset from Bloomberg. This research encapsulates data from 32 banks publicly listed on the London Stock Exchange over a six-year span from 2017 to 2022. Employing panel data regression models while controlling leverage and bank size, we delve into the relationship between banks’ CSR engagements, as reflected in their ESG scores, and their financial outcomes. Our findings indicate a negative correlation between the ESG score and both the ROA and ROE, suggesting that elevated CSR commitments may inversely impact short-term financial returns. This finding not only challenges prevailing narratives within the sector but also fosters a crucial discourse on the balance between ethical banking practices and profitability. The implications of this research study are manifold, extending to policymakers, banking executives, and investors, suggesting a revaluation of CSR strategies in alignment with long-term value creation and sustainable banking. This study not only enriches academic discourse on CSR within the financial sector but also serves as a beacon for future inquiries into the evolving landscape of responsible banking, advocating for a nuanced understanding of CSR’s role in shaping the financial and ethical contours of the banking industry.

Impact of Green Financing on CSR and Environmental Policies and Procedures

Despite increasing global attention towards sustainable development, the empirical linkage between green financing and the enhancement of environmental and social governance (ESG) practices within industries remains underexplored. This study investigates the influence of green financing on Corporate Social Responsibility (CSR) and environmental policies and procedures in 40 Chinese industries from 2010 to 2020. By employing a baseline regression and a difference-in-differences methodology, this paper aims to quantify the extent to which green financing initiatives have impacted CSR activities and the adoption of rigorous environmental policies and procedures in the Chinese industrial sector. The results indicate that industries with access to green financing have shown significant improvements in their CSR engagements and the stringency of their environmental policies and procedures compared to those without such financial incentives. Specifically, the difference-in-differences analysis reveals a positive and statistically significant effect of green financing on the adoption of more stringent environmental policies and the enhancement of CSR practices. We identify the specific areas within CSR and environmental policies that are most influenced by green financing. We assess the effectiveness of green financing as a tool for promoting sustainable industrial practices. The analysis utilizes a comprehensive dataset, including industry-specific financing and ESG performance indicators, to conduct a longitudinal assessment over the decade in question. Based on these findings, the study concludes with a policy implication that emphasizes the critical role of green financing as a catalyst for improving CSR and environmental standards in industries. It suggests that policymakers and financial institutions should consider expanding green financing mechanisms to accelerate the transition towards more sustainable industrial practices.

The peer effects of corporate social responsibility in China: A pre-registered report

In recent years, businesses worldwide have shown a growing interest in adopting corporate social responsibility (CSR) practices. The driver of corporate CSR engagement has attracted widespread attention. This study seeks to examine how firms react to the CSR practices of their peers in China. The ordinary least square would be used to validate our hypothesis and the instrumental variable approach would be utilized to alleviate endogeneity threats. In addition, we propose two channels, named as market competition hypothesis and institutional pressure hypothesis to account for this peer effect. We plan to provide some empirical evidence to support both channels.

Do CSR Firms Make Better Acquisitions? - The Case of Taiwan

This study examines the association between Corporate Social Responsibility (CSR) activities measured by two of Taiwan’s leading publishers, the Commonwealth Magazine and the Global View Magazine, and the acquirer’s short- and long-term performances after the merger announcement in Taiwan. We use CEO compensation and the firm’s free cash flow as the proxies for CEO self-confidence. We find that the acquirer’s CSR engagement is positively associated with its long-term performance but not with its short-term performance. CEO compensation is positively associated with the acquirer’s performance, especially after the mandatory establishment of the remuneration committee for publicly traded firms. However, the acquirer’s free cash flow is found negatively associated with its performance, supporting Jensen’s (Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76, 323–329) free cash flow hypothesis or CEO hubris. These findings indicate that the CSR measurements of Commonwealth Magazine and Global View Magazine do provide valuable information for CSR activities and that CSR activities do enhance firm value in the long run. Furthermore, the requirement for the establishment of the remuneration committee does improve the effectiveness of CEO compensation for firm performance in Taiwan.

Aggressive CSR strategy and CSR awarding: managerial opportunism versus social activism

PurposeDespite the extensive body of research on absolute corporate social responsibility (CSR) performance, limited attention has been given to the distinct concepts of optimal and aggressive CSR engagement, as well as their associations with CSR awarding. This study aims to differentiate between optimal and aggressive CSR engagement and examine their relationship with CSR awarding while considering the moderating influence of board characteristics from the perspectives of stakeholder and agency theories.Design/methodology/approachThis empirical analysis draws on an international dataset comprising 43,803 observations from nine sectors across 41 countries. We employ a least squares dummy variable regression approach that accounts for country, industry and year effects to conduct the analysis.FindingsThe results reveal that engagement in aggressive CSR activities beyond the optimal level leads to the generation of a social reputation through CSR awarding. However, the influence of board characteristics on this relationship is significant. Specifically, the presence of a dedicated CSR committee encourages CSR awarding in the context of aggressive CSR engagement. Conversely, board independence constrains the relationship between aggressive CSR engagement and CSR awarding. Notably, board gender diversity does not have a discernible impact on this connection.Practical implicationsOur evidence provides valuable insights to help firms seeking to enhance their social reputation through CSR activities better allocate their resources and avoid unnecessary financial commitments.Originality/valueThis study advances the current understanding by exploring the relationship between aggressive CSR engagement and the recognition of CSR awards. Furthermore, it scrutinises the factors that dictate when such aggressive CSR engagement translates into enhanced social reputation, as evidenced by the attainment of CSR awards.

Awe of the blue minds: Location, corporate social responsibility, and firm value

AbstractNeuropsychologists claim that exposure to a massive water scene triggers the feeling of Awe which causes more prosocial behavior. I find that coastal firms have significantly higher corporate social responsibility (CSR) scores than non‐coastal firms. The difference‐in‐difference test shows that CSR engagement erodes when firms relocate away from coasts. These results are robust to the use of propensity score matching and entropy balancing to address selection bias, Oster's test to address omitted variable bias, and control for institutional ownership, social capital, religiosity, CEO and local political orientation, and natural disaster risk. Further analysis shows that CSR creates value only for coastal firms.

Double-edged sword of corporate social responsibility (CSR) halo: the role of CSR efforts and crisis type and severity

ABSTRACT In recent years, the restaurant industry has been struggling with a variety of brand crises, including both product and moral harm crises. To mitigate the negative impact of such crises on their brands, companies are actively engaging in corporate social responsibility (CSR) initiatives. While a number of previous studies have investigated the influence of CSR on consumers’ responses to a brand in a routine setting, few have incorporated crisis-related situational variables into their examination of the role of CSR in a brand crisis situation. In order to test the extent to which the CSR halo plays a role in consumers’ evaluation in a brand crisis event, this study used a scenario-based 2 CSR efforts (low/high) x 2 crisis type (product harm/moral harm crisis) x 2 crisis severity (low/high) experimental design. The findings suggest that a higher level of brand engagement in CSR can offset the negative consequences of brand crisis in the case of product harm and less severe brand crisis, compared to moral harm and severe brand crisis, respectively. Our results provide valuable insights for companies wishing to respond successfully to a brand crisis event based on predicted consumers’ responses and on their CSR reputation.

Do female family managers affect corporate social responsibility in Chinese family firms?

ABSTRACT This study investigates the relationship between female family directorship and Corporate Social Responsibility (CSR) in the specific context of Chinese family firms. It explores the moderating influences of gender inequality, family ownership and economic policy uncertainty. Based on social role theory, we find that female family directorship is associated with a stronger commitment to external CSR engagement than to internal CSR. Moreover, gender inequality and family ownership attenuate the relationship between female family directorship and external CSR, while economic policy uncertainty enhances their impact on external CSR. Overall, we contribute to the literature at the intersection of family firms, female leadership, and corporate social responsibility.

Corporate social responsibility, political connections, and barrier industry diversification: Evidence from China

In this paper, using the data of private sector enterprises listed in China from 2009 to 2014, we study the relationships between corporate social responsibility, political connections, and barrier industry diversification among Chinese public-listed private-sector enterprises. The empirical test results reveal that establishing political connections can contribute to diversification of these firms, while engaging in corporate social responsibility helps to promote their barrier industry diversification. More engagement in corporate social responsibility makes it easier for them to establish political connections and strengthen the association between political connections and barrier industry diversification. This study provides new empirical evidence for not only understanding the relationship between political connections of these firms and access to economic resources but also a new perspective regarding their conduct related to corporate social responsibility (CSR).

Communication strategies for effective CSR and stakeholder engagement in the oil & gas industry: A conceptual analysis

This conceptual analysis explores communication strategies for effective Corporate Social Responsibility (CSR) and stakeholder engagement in the oil and gas industry. The oil and gas sector faces increasing scrutiny from stakeholders, including communities, governments, NGOs, and investors, regarding its social and environmental impact. Effective communication is crucial for companies to build trust, manage expectations, and demonstrate their commitment to CSR. The analysis discusses key communication strategies that companies can employ to enhance CSR and stakeholder engagement. These strategies include transparency, dialogue, collaboration, and storytelling. Transparency involves providing clear and accurate information about the company's CSR initiatives, performance, and impact. Dialogue involves engaging with stakeholders to understand their concerns, gather feedback, and address issues. Collaboration involves partnering with stakeholders to co-create solutions and maximize the impact of CSR initiatives. Storytelling involves sharing compelling narratives about the company's CSR efforts to inspire stakeholders and build a positive reputation. The analysis also highlights the importance of tailoring communication strategies to the specific context of the oil and gas industry. This includes addressing the unique challenges and sensitivities associated with oil and gas operations, such as environmental risks, community impacts, and regulatory complexities. Overall, the analysis emphasizes the importance of communication in driving effective CSR and stakeholder engagement in the oil and gas industry. Companies that adopt transparent, dialogue-driven, collaborative, and storytelling-based communication strategies are more likely to build trust, enhance their reputation, and create positive social and environmental impact.

CSR attribution: Is it the cornerstone of CSR success?

PurposeThe current study aims to propose and empirically investigate a conceptual model of the most relevant antecedents and consequences of Corporate Social Responsibility (CSR) attribution, thus providing a practical and concise model as well as examining brand attachment as a mediator explaining the relationship between CSR attribution and its consequences.Design/methodology/approachA between-subjects experimental design was employed. The study included two experimental conditions; intrinsic and extrinsic CSR attribution and a control condition. An online self-administered survey was utilised for data collection. The sample was a convenience sample of 336 university students. Both one-way between-groups ANOVA and Partial Least Squares-Structural Equation Modelling (PLS-SEM) were utilised for hypotheses testing.FindingsThe most significant antecedents of CSR attribution in order of importance are the firm's approach to CSR communication, past corporate social performance, CSR type and the firm's call for customers' participation in its CSR. CSR attribution exerted a significant direct positive impact on brand attachment and trust. Three significant indirect consequences of CSR attribution were PWOM intention, purchase intention and brand loyalty intention. Whereas trust played a significant mediating role between CSR attribution and its three indirect consequences, brand attachment exerted significant mediation only between CSR attribution and brand loyalty intention. Brand attachment might mediate the relationship between CSR attribution and purchase intention. However, brand attachment failed to play a mediating role between CSR attribution and PWOM intention.Originality/valueSeveral studies marginally investigated CSR attribution. Despite the vital role of CSR attribution in how consumers receive firms' CSR engagement, the availability of CSR attribution-centric studies is limited. By introducing a model of the most relevant antecedents and consequences of CSR attribution, this study aids in understanding the psychological mechanism underlying consumers' CSR attribution and provides valuable implications.

Do anticipated government environmental audits promote corporate social responsibility? Evidence from China

AbstractWe examine the impact of China's announcements of upcoming government environmental audits (GEAs) on firms' corporate social responsibility (CSR). We hypothesize that firms, especially heavily polluting firms, engage in more CSR to proactively burnish their public image to weather forthcoming adverse outcomes from a GEA. Our baseline findings confirm that firms respond to the government's GEA announcement by engaging in more CSR. Additional analysis suggests that reputation concerns and environmental fines mediate the impact of GEA announcements on CSR. Cross‐sectional analyses show that the effect of GEA announcements on CSR is more salient for firms: (1) in a business environment in which GEAs are more effective, (2) that CSR engagement is critically important, or (3) that CSR can serve some special function. Overall, our findings imply that it is generally a good government policy to implement GEAs.

Assessing corporate social responsibility in South Africa’s built environment industry

PurposeStudies showed that stakeholders want the construction sector’s organisations to be more accountable and transparent regarding social and environmental issues through corporate social responsibility (CSR). There is a paucity of literature regarding CSR implementation in the construction sector, especially in developing countries like South Africa. Hence, the study evaluated CSR’s merits and hindrances and suggested solutions to enhance its implementation in the South African construction sector of Mpumalanga Province.Design/methodology/approachThe researchers employed a questionnaire survey method to collect data from 68 useable respondents in the South African construction sector of Mpumalanga Province. The main section of the questionnaire was divided into three parts, each addressing an objective mean item score ranking technique.FindingsFindings show management lacks willingness, absence of recognition for implementing CSR at tender adjudication, professionals regard CSR as a “soft issue,” inadequate ability to carry out CSR initiatives and lax CSR knowledge emerged as the key issues hindering construction stakeholders, especially construction companies, from participating in CSR in South Africa. The research suggests initiatives to enhance CSR in the construction industry.Originality/valueThe study shows that the findings can be used to improve the implementation of CSR engagement and possibly enhance a policy to stimulate friendly CSR in the South African construction sector.

Do labor unions enhance corporate social performance? Evidence from Korean financial markets

This study examines the impact of labor unionization on corporate social responsibility (CSR) in South Korean listed companies, particularly in the context of chaebol-affiliated firms. Using a dataset of 2,622 firm-year observations between 2005 and 2009, the study employs regression analyses to explore the relationship between unionization and CSR performance. Key findings indicate a significant negative correlation between labor unionization and CSR engagement, suggesting that unionized firms exhibit less involvement in CSR activities. This association, however, is not significant in chaebol-affiliated firms, where the unique corporate structure and shared resources appear to mitigate the influence of labor unions on CSR. Furthermore, the study reveals a positive link between CSR initiatives and labor productivity in unionized firms, indicating that CSR may enhance employee efficiency. The study highlights the intricate relationships between labor unionization, corporate governance, and CSR, particularly in the context of Korean business conglomerates. It emphasizes the importance of aligning labor interests with CSR commitments and underscores the role of effective corporate governance in promoting CSR activities. The positive impact of CSR on labor productivity underscores its potential in boosting employee performance. AcknowledgmentThis work was supported by the Gachon University research fund of 2023. (GCU-202303770001).

The price of corporate social irresponsibility in seasoned equity offerings: International evidence

We examine the impact of poor corporate social responsibility engagement signalled through negative environmental and social (E&S) incidents on equity financing via seasoned equity offerings (SEOs) across 25 countries. The results show that negative E&S incidents significantly aggravate SEO underpricing, thereby increasing the cost of raising equity capital. Managers appear to take the adverse effects into consideration as reflected in the reduced likelihood of issuing equity following the experience of negative E&S incidents. Further analysis shows that such adverse pricing effects are stronger for firms that are subject to significant social and regulatory penalties for their E&S misconducts, suggesting that negative E&S incidents increase corporate reputational losses and elevate regulatory risk. Finally, there are rich cross-country variations in the SEO pricing effects of E&S risks with legal investor protection and national culture playing an important role in influencing the pricing of E&S risk.

Responsible risk-taking and the CSP-financial performance relation in the banking sector: A mediation analysis

In this study, a mediation analysis is conducted using data for 394 banks listed in 54 countries from 2002 to 2017 with the aim to investigate the role of bank risk-taking as a mediation channel to explain the CSP–financial performance relationship in the banking sector. Results show that stronger CSP is associated with improved financial performance and this relationship is partially mediated by bank risk-taking, with CSP increasing financial performance through the reduction of bank risk. Adopting more prudent—less risky or speculative—banking practices is a key method through which banks can embody social responsibility, given the systemic importance of bank stability. However, such banks tend to be more financially successful. The empirical results are consistent across various robustness checks, thereby supporting to the notion that corporate social responsibility (CSR) engagement helps banks to achieve a “win-win” situation—more profitable yet more responsible and less risky banks.

The impact of firm risk on the value of cash holdings: The moderating role of corporate social responsibility

This study investigates the impact of firm risk on the value of cash holdings, and how corporate social responsibility (CSR) affects this relationship considering controlling shareholders. Using a sample of Taiwanese publicly listed firms from 2005 to 2018, we find that firms' CSR activities are more positively associated with the value of cash holdings because of controlling shareholders' incentive effects in most cases. Moreover, the precautionary view suggests that high-risk firms positively influence the value of cash holdings. Interestingly, considering controlling shareholders weakens the moderating impact of CSR engagement on the relationship between firm risk and value of cash holdings. Thus, CSR is an important determinant of corporate cash policies among Taiwanese firms. Our empirical results provide managers, investors, and policymakers with important decision-making insights.