Corporate Social Responsibility and Firm Value: The Moderating Effects of Financial Flexibility and R&D Investment

Zhaoyang Guo, Siyu Hou and Qingchang Li
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Zhaoyang Guo: Marketing Department, School of Management, Xiamen University, Xiamen 361005, China
Siyu Hou: Marketing Department, School of Management, Xiamen University, Xiamen 361005, China
Qingchang Li: Marketing Department, School of Business Administration, Jimei University, 185 Yinjiang Road, Jimei District, Xiamen 361021, China

Sustainability, 2020, vol. 12, issue 20, 1-17

Abstract: Despite the significance of corporate social responsibility (CSR), there remains an extensive debate regarding its implications for firm value. This study examines the moderating effects of financial flexibility and R&D investment on CSR and firm value. Using multiple archival data of 2311 companies from 2010 to 2016, our study finds that CSR is a “double-edged sword” for firm value; specifically, CSR significantly increases systematic risk but reduces firms’ idiosyncratic risk as well as the Tobin’s q. Besides, the results indicate that financial flexibility and R&D investment significantly reduce the negative correlation between CSR and Tobin’s q, the difference between the two being that financial flexibility can reduce the positive relationship between CSR and system risk, while R&D spending can reduce the negative relationship between CSR and idiosyncratic risk. By adding new aspects to the discussion about how CSR affects firm value, the results speak to both theorists and practitioners.

Keywords: corporate social responsibility; firm value; R& D investment; financial flexibility; risk (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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