Corporate Social Responsibility Investment Research Articles

Investment in corporate social responsibility, disclosure practices, and financial performance of banks in Nigeria

Using panel data set from banks in Nigeria, a developing country, this paper examines the effects of corporate social responsibility (CSR) investment and disclosure on corporate financial performance. The results from the Wallace and Hussain estimator of component variances (a two-way random and fixed effects panel) suggest that CSR investment without due disclosure would have little or no contribution to corporate financial performance. This paper supports the argument that firms could benefit both financially and non-financially from a strategic CSR agenda.

Financial Performance and Corporate Social Responsibility (CSR): Empirical Evidence from Banks in India

In the era of changing business dynamics and evolving socio economic systems the concept of Corporate Social Responsibility (CSR) has become widespread. In the recent decades this ideology is gaining momentum in both academic and business life, i.e., the company exists for and has responsibilities towards a wider group of stakeholders and it must have some objectives other than profitability. The Friedman’s formulation that “The Business of Business is Business” has outlived its utility, and corporate social responsibility and being a good corporate citizen are the buzzwords today. It is believed that organizations which do not consider any social responsibility towards society will ultimately tend to lose in the long run. It is questioned whether any relationship exists between financial performance and social performance. The present study aims to examine the impact of financial performance on CSR investments of selected banks in India. The research based on 20 banks (listed in BSE) investigates the impact of financial indicators viz a viz Profit After Taxes (PAT) and Earning Per Share (EPS) on CSR investments in some selected banks in India. Correlation and multiple regressions have been used to analyze the relationship among these financial profitability indicators and CSR investments. Results indicated a high significant positive correlation between PAT and CSR investments indicating that with an increase in profits, banks are increasingly spending on their CSR initiatives and vice versa. On the contrary though a significant positive correlation exits between PAT and EPS, the association between EPS and CSR investments though positive was found to be insignificant.

The Evolution of Business Groups’ Corporate Social Responsibility

In this theoretical paper, I analyze business groups’ corporate social responsibility (CSR). Building on economic thinking, I propose that the level and diversity of CSR investments of business groups evolve with the development of the country, as a result of the interaction of two drivers: the level of infrastructure deficiencies and the cost of negative externalities. I argue that in underdeveloped countries, business groups have high levels and low diversity of CSR investments, focusing on the social arena to compensate for infrastructure deficiencies. As countries implement pro-market reforms and become emerging economies, the level of CSR investments diminishes as business groups can rely on external providers and the government for supporting infrastructure, but CSR diversity increases to address the growing costs of negative externalities in the environmental and economic arenas. As countries further develop to become advanced economies, business groups’ level and diversity of CSR investments increase to prevent the high costs of negative externalities in the social, environmental, and economic arenas proactively.

Linking corporate social responsibility attributions and creativity: Modeling work engagement as a mediator

Abstract The purpose of this paper is to examine whether employees attribute different motives to corporate social responsibility (CSR) practices of the organization and if these motives predict employee creativity. In addition, the study aims to explore the underlying psychological mechanism by proposing work engagement as a mediator of the relationship between CSR attributions and creativity. Sample for the study consisted of 219 employees from various IT organizations in India known for their CSR engagement. Exploratory factor analysis, CFA and SEM bootstrapping procedures were used to test the study hypotheses with the help of SPSS AMOS 24. Results indicate that employees differentiate the motives behind organizational CSR engagement as intrinsic and extrinsic. These motives were found to differentially impact work engagement and creativity. Intrinsic CSR attributions related positively and significantly with creativity, and work engagement fully mediated the relationship. However, extrinsic CSR attributions failed to show any significant relationship with both work engagement and creativity. By highlighting the role of the attributions in the context of CSR, this research provides important information on why organizational CSR involvement may not always yield positive results for the organization. The study identifies managing employees’ skepticism as a critical success factor in the implementation of CSR to optimize the returns on CSR investments. The findings also carry significant implications for managers and policy makers of Indian IT industry in terms of how they devise, implement and communicate CSR plans and strategy.

Corporate social responsibility practices of banks in Bangladesh: a structuration theory perspective

The aim of this paper is to illuminate the role of the socio-economic, cultural and religious context in shaping corporate social responsibility (CSR) practices of banks in Bangladesh. The authors utilize content analysis of annual reports and websites of banks to identify CSR activities in healthcare, education and financial inclusion sectors. Structuration theory (ST) is used to explain how interactions between bank managers (as agents) with the social structures (institutions and government) shape CSR practices. The findings show that banks’ engagement in CSR activities is embedded in the social fabric of Bangladesh and not a result of the Global Reporting Initiative (GRI). It is also noted that Islamic banks focus their CSR activities on social justice, while other banks target education and other humanitarian issues. The authors contribute to the literature on the determinants of CSR by revealing the rationalizations of different actors in the production and reproduction of CSR practices in Bangladesh, an insight attributed to ST. The researchers conclude that Islamic beliefs influenced managers to mitigate poverty through CSR investments.

Environmental corporate social responsibility, firm dynamics and wage inequality

Based on a general-equilibrium framework, this paper examines the income distributional effect of firms which commit to environmental corporate social responsibility (ECSR) investments. In the short run with fixed number of firms, ECSR investment raises capital rental cost and hence widens wage inequality between skilled and unskilled workers via the factor substitution effect, while the increased capital cost causes firms to exit in the long run. This releases capital and hence lowers the capital rental cost. Thus, the wage gap can be mitigated or even narrowed by a rise in unskilled wage and a drop in skilled wage via the firm-exit effect. This theoretical prediction is confirmed by the empirical result.

Are more corporate social investments better? Evidence of non-linearity effect on costs of U.S. Bank loans

We explore a research issue of whether corporate social responsibility (CSR) activities have a monotonic relationship with the cost of bank debt. Employing extensive data of private syndicated loans issued by U.S. firms, we find that the benefit of CSR strengths is not monotonic but declines at a decreasing rate, relative to the loan spread of private bank loans. Our findings indicate that there is an optimal level of CSR engagement with respect to the cost of debt. Undocumented for U.S. firms in the CSR literature, our results offer new evidence on the non-linearity effect of CSR on debt financing costs and suggest that a borrower's CSR investments beyond an optimal level are viewed as ineffective and wasteful.

Performance Outcomes of Investing Slack Resources in Corporate Social Responsibility

Our study examined relationships among slack resources, investment in corporate social responsibility (CSR) and firm performance, finding that accounting and market returns respond differently to investments of slack in CSR. Although accounting returns to both financial and organizational CSR investment were positive, equity markets reward organizational slack but punish financial slack investments. Moreover, distinguishing among forms of CSR indicates that both accounting and market returns respond much more positively to investment in stakeholder protection than to investment in stakeholder improvement. Finally, risk, strategy, and governance are mediating mechanisms partially explaining CSR effects but not to the extent we expected.

Firm ownership structure impact on corporate social responsibility: evidence from austerity U.K.

ABSTRACT Corporate social responsibility (CSR) has become an increasingly important sustainable development issue in U.K. The main contribution of this study is to examine how firm ownership structure impacts good corporate governance and CSR in U.K. during austerity conditions. Following the financial crisis of 2007–2008, the U.K. government introduced austerity conditions which impacted firm CSR activities. From the initial sample of more than 250 firms, 50 consistently remain listed on the FTSE4good index during 2008–2012 and are analysed. The definition of CSR distinguishes voluntary and mandatory CSR construct. Findings indicate Board ownership structure and satisfactory firm performance impact on the level of voluntary CSR. Board ownership results suggest increased institutional and non-CEO shareholdings support a higher level of voluntary CSR engagement, whilst increased CEO shareholdings lead to a lower level of investment in voluntary CSR. In terms of satisfactory firm performance, results suggest positive attainment discrepancy supports a higher level of voluntary CSR, whereas greater potential organisational slack leads to a lower level of voluntary CSR investment. Effective governance and voluntary CSR association is more pronounced under conditions of high attainment discrepancy and low organisational slack. The findings suggest implications for adapting firm decision-making latitude and government policy between austerity and prosperity conditions.

Which CSR Activities Are More Consequential? Evidence From the Great Recession

We exploit the Great Recession of 2008 to study how firms view corporate social responsibility (CSR). When confronted with an adverse exogenous shock, firms are forced to prioritize. Our results show that, during the Great Recession, firms do not lessen their overall CSR investments, suggesting that they recognize the importance of CSR. However, further analysis shows that firms substantially reduce investments in five CSR activities (Community, Employee, Environment, Human Rights, and Product), while increasing investments in two CSR activities (Corporate Governance and Diversity). Firms appear to view some CSR activities as more essential to the strategic direction of the firm than others.

Which CSR activities are more consequential? Evidence from the Great Recession

We exploit the Great Recession of 2008 to study how firms view corporate social responsibility (CSR). When confronted with an adverse exogenous shock, firms are forced to prioritize. Our results show that, during the Great Recession, firms do not lessen their overall CSR investments, suggesting that they recognize the importance of CSR. However, further analysis shows that firms substantially reduce investments in five CSR activities (Community, Employee, Environment, Human Rights, and Product), while increasing investments in two CSR activities (Corporate Governance and Diversity). Firms appear to view some CSR activities as more essential to the strategic direction of the firm than others. Firms appear to view some CSR activities as more essential to the strategic direction of the firm than others.

Corporate apology for environmental damage

Apologies are a powerful way to restore trust and reduce punishment costs in bilateral settings. But what do we know about public apologies for large scale man-made disasters? Herein we report on results from an experiment with apologies in a multilateral setting: a firm-caused environmental disaster. Subjects read about an oil spill scenario, and learned whether the oil firm made a full apology, a partial apology, or no apology, and whether the firm had a good, bad, or no environmental reputation. A partial apology is one that fails to accept full material responsibility for damages, such as by shifting the blame to another party. We find that full apologies and better reputation reduce the demand for punishment. However, full apologies and reputation are substitutes, with reputation being significantly more important. Additionally, apologies do not reduce the demand for compensation and may increase it if the firm is clearly a bad actor, or if admission of guilt is the only information subjects have. Our results help explain corporate social responsibility investments and greenwashing, and why many public apologies over an environmental disaster are only partial apologies.

CSR Performance Proxies in Large-Sample Studies: 'Umbrella Advocates', Construct Clarity and the 'Validity Police'

Corporate social responsibility (CSR) performance is multidimensional, and is often considered an “umbrella” construct (Gond & Crane, 2010). This multidimensionality has generated substantive concerns regarding the construct validity and reliability of common empirical proxies of CSR performance (CSRP); thereby attracting the “validity police” (Rowley & Berman, 2000; Gond & Crane, 2010). Although the breadth and depth of CSRP measurement continues to increase, its links to an underlying, agreed-upon theory remains in doubt. Meanwhile, a market for quantitative measurement of CSRP has grown dramatically. The major providers of CSR ratings are: MSCI (ESG STATS, formerly known as KLD); Thomson Reuters (ASSET4); and Sustainalytics (ESG Indicators). Almost all large-scale empirical studies dealing with CSR use only one of the three providers as the source for their CSRP proxies. The purpose of our study is to review the CSRP constructs and proxies employed in studies published in a select set of influential journals and working paper series, and to determine whether the results might be influenced by the selection of CSRP proxies. We situate our analysis within broader academic debates concerning the calibration of construct and proxy convergence and precision, which provides a basis for evaluating the empirical durability of CSRP constructs across proxy specifications. Using a combination of statistical techniques and interviews with professionals involved in the CSR ratings and investment industry, our analyses show the potential for empirical results to be significantly sensitive to proxy selection and provide qualitative evidence that helps explain the need for more precise and thorough construct and proxy development. We assert that this research is critically important because the accounting literature builds on significant results generated by different proxies for CSRP.

A Review of Corporate Social Responsibility and Real Estate Investment Trust Studies: An Australian Perspective

The aim of this paper is to review empirical findings in the literature relating to corporate social responsibility (CSR) and real estate investment trust (REIT) performance. Specifically, we synthesise CSR‐focused REIT performance studies in an attempt to establish empirical approaches utilised in the academic literature, present findings, identify relevant gaps and reveal themes for future research. The literature focusing on the CSR of REITs to‐date has primarily focused on corporate governance, sustainability and performance, with the latter concentrating on firm‐level financial consequences rather than investment return performance. The review showed that there has been limited empirical research conducted on the relationship between CSR and risk‐adjusted returns of REITs, particularly in Australia.

Social investments at a glance: reviewing Russian perspectives

The aim of the research is to analyze the modern trends and today’s development stage of social investments and corporate social responsibility (CSR) in Russia. The article touches a vital topic of contemporary relations of the triada “state-business-society” in Russian public discourse. Considering the system approaches and development methodology of business and government relations, the authors try to summarize the accumulated experience in CSR and social investments field. It is worth noting that Russian scientists successfully carried out the subject of the research and the conceptual apparatus, defined and systematized public expectations, analyzed and summed up real experience of socially responsible Russian and foreign companies. The article shows an interesting phenomenon that in modern scientific community is forming and becomes stable a new institutional paradigm when CSR in the narrow sense goes beyond charity and philanthropy, and today it is expressed in a broad sense - as corporate citizenship, including some political dimensions. Besides, the article highlights indicative results on the authors’ applied research “Experience analysis of social partnerships between business and government, social investments and corporate social responsibility” hold in Krasnodar and Rostov-on-Don, Russia, in 2016-2017.

Investments in Corporate Social Responsibility and Its Effect on Financial Performance of Commercial Banks in Ethiopia

Investments in Corporate Social Responsibility and Its Effect on Financial Performance of Commercial Banks in Ethiopia

Coordination of a socially responsible two-stage supply chain under price-dependent random demand

This paper investigates the coordination problem of a supply chain (SC) composed of a manufacturer exhibiting corporate social responsibility (CSR) and a retailer faced with random demand. The random demand is made up of the multiplication of price-dependent demand and random demand factor (RDF), plus the CSR-dependent demand. The centralized decision problem of the SC is an extension of the existing price setting newsvendor problem (PSNP). It is found that the sufficient condition for the quasi-concavity of expected profit (EP) on PSNP can not ensure the quasi-concavity of EP of the SC. Then, the concavity condition of EP related to the CSR effect factor is presented in the case of uniformly distributed RDF and linear demand in price, and the concavity of EP is proven under centralized decision. For decentralized decision under manufacturer’s Stackelberg game, the manufacturer determines wholesale price and its CSR investment, and then the retailer decides the order quantity and the retail price. The standard revenue-sharing (RS) contract is found not able to coordinate the SC, so a modified RS (MRS) contract is proposed to coordinate the SC. Finally, numerical examples illustrate the validity of the theoretical analysis and the coordination effectiveness of the MRS contract via Matlab.

Ownership and corporate social responsibility in Indian firms

PurposeThe purpose of this paper is to look at the association between different ownership categories and corporate social responsibility (CSR) spending of selected Indian firms.Design/methodology/approachRandom-effects Tobit panel regression is performed on a panel of 4,388 firm years of 1,722 unique firms over a three-year period (2014-2016).FindingsDifferent categories of institutional investors have different preferences for CSR spending of a firm. Promoters of business-group affiliated and unaffiliated firms also behave differently towards CSR activities of their firms.Research limitations/implicationsHeterogeneous behavior of institutional investors is revealed through the study. Foreign institutions and domestic banks are supportive of CSR investments of a firm. Promoters of family firms and group affiliates also diligently plan CSR activities.Practical implicationsManagers cannot ignore the heterogeneities of institutional investors in their investment decisions. Individual investors can align their philanthropic preferences with those of different types of institutional investors or firms.Social implicationsFamily-owned firms play a significant role in CSR activities of emerging economies, while individual promoters are not as attracted by the reputational prospects of CSR.Originality/valueThis paper considers the role of heterogeneities of institutional investors in influencing CSR spending of emerging-economy firms. This heterogeneity has not been previously studied in this context.

Impact of Corporate Social Responsibility Dimensions on Firm Value: Some Evidence from Hong Kong and China

There has been significant interest and debate on the impact that a firm’s investments in corporate social responsibility (CSR) practices and initiatives have on its market value. In this paper, we target an area that is relatively under-researched: the relevance of CSR practices and initiatives for firms in the emerging economic region of mainland China and Hong Kong, where market development and the institutional environment lag that of developed economies. Using independent CSR assessment data on a sample of large mainland Chinese and Hong Kong firms listed on the Hong Kong Stock Exchange, we evaluate the impact of six CSR dimensions on the firms’ adjusted stock market value over a three-year period. We found support for the influence of only two of the six dimensions considered, namely, the CSR practices and initiatives focused on community investment through philanthropy and, to a lesser extent, the CSR practices and initiatives focused on enhancing workplace quality, to be significant predictors of firm value. This suggests that social and people-centric dimensions of CSR are more relevant than technical and process-centric dimensions of CSR for mainland Chinese and Hong Kong firms. Furthermore, we found support for the hypothesis that the impact of CSR practices and initiatives on firm value follows an inverted U-shaped relationship over time, suggesting that the effect of these initiatives on firm value steadily increases during the initial years after their adoption to reach a maximum and then gradually fades away in subsequent years. To this end, this study advances our knowledge of the specific CSR dimensions that contribute to firm value and their relevance for Chinese and Hong Kong firms.

Does corporate social responsibility disclosure improve firm investment efficiency?

PurposeThe purpose of this paper is to investigate the impact of corporate social responsibility (CSR) disclosure on firm-level investment efficiency.Design/methodology/approachAn econometric model is used to estimate the impact of CSR reporting on investment efficiency on a sample of listed Chinese firms during the period from 2010 to 2013. Financial reporting quality is included in the model as a control variable. Investment efficiency is estimated based on existing models. Two scenarios are identified: under-investment and over-investment.FindingsThe results provide evidence of a higher level of investment efficiency for CSR reporting firms than for non-reporting firms. This relationship is, however, more pronounced in the over-investment scenario than in the under-investment scenario. In addition, the association between CSR disclosure and investment efficiency is stronger for firms with lower financial reporting quality (FRQ). These findings support the hypothesis that CSR disclosure provides effective incremental information that contributes to reduce information asymmetry and promote investment efficiency.Originality/valueThis is the first paper that directly tests the association between CSR disclosure and firm-level investment efficiency. The results suggest that firms and investors should consider the effect of CSR disclosure on information asymmetry and its impact on the availability and cost of capital. This work also contributes to the understanding of the economic impacts of CSR disclosure and provides arguments for regulatory entities to enforce CSR disclosure.