Corporate Social Responsibility

Harrison Hong and Edward P. Shore

No 30771, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Is shareholder interest in corporate social responsibility driven by pecuniary motives (abnormal rates of return) or non-pecuniary ones (willingness to sacrifice returns to address various firm externalities)? To answer this question, we categorize the literature into seven tests: (1) costs of capital, (2) performance of portfolios, (3) ownership by types of institutions, (4) surveys and experiments, (5) managerial motives, (6) shareholder proposals, and (7) firm inclusion in responsibility indices. These tests and the most recent proposals data predominantly indicate that shareholders are driven by non-pecuniary motives. To stimulate further research on welfare implications for global warming, we assess whether estimates of the returns shareholders are willing to sacrifice (or, ‘greeniums’), along with the increasing amounts of assets pledged to firms that become sustainable, are consistent with the growth of aggregate investments in the decarbonization sector.

JEL-codes: G1 G10 G12 G14 G17 G19 G2 G20 G21 G23 G3 G31 G35 G39 G4 (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-cfn
Note: AP CF
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Published as Harrison Hong & Edward Shore, 2023. "Corporate Social Responsibility," Annual Review of Financial Economics, vol 15(1), pages 327-350.

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