Socially responsible firms

Allen Ferrell, Hao Liang and Luc Renneboog

Journal of Financial Economics, 2016, vol. 122, issue 3, 585-606

Abstract: In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.

Keywords: Corporate social responsibility; Agency costs; Corporate governance (search for similar items in EconPapers)
JEL-codes: G30 G31 G35 K22 L21 M14 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (302)

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Related works:
Working Paper: Socially Responsible Firms (2014)
Working Paper: Socially Responsible Firms (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:122:y:2016:i:3:p:585-606

DOI: 10.1016/j.jfineco.2015.12.003

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