It’s who you know that counts: Board connectedness and CSR performance

Abu Amin, Lamia Chourou, Syed Kamal, Mahfuja Malik and Yang Zhao

Journal of Corporate Finance, 2020, vol. 64, issue C

Abstract: We examine whether and how board connections affect the firm's corporate social responsibilities (CSR). Grounded in the agency, resource dependence, and social network theory, our research predicts and finds that board connectedness is positively associated with CSR performance. This result is robust to a quasi-natural experiment, alternative measurement specifications, and an instrumental variable approach. Our findings suggest firms that operate in a complex business environment or require more advising (i.e. where demand for information is greater) benefit more from a well-networked board. Also, firms that are poorly governed, have high stock return volatility, low market capitalization, or low institutional ownership tend to benefit more from the well-connected board when the cost of acquiring information is higher. In addition, we show that independent directors’ abilities to gather information and resources from their networks can facilitate the transmission of information. Collectively, our study documents the informational advantage of a network as the predominant channel that allows a well-connected board to improve a firm’s CSR performance.

Keywords: Social network; Board connectedness; Corporate social responsibility (search for similar items in EconPapers)
JEL-codes: G30 G39 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:64:y:2020:i:c:s0929119920301061

DOI: 10.1016/j.jcorpfin.2020.101662

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