The Evolution of Public Companies’ Corporate Social Responsibility

Mengxi Chen () and Xu Niu
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Mengxi Chen: School of Business, The College of New Jersey, Ewing, NJ 08628, USA
Xu Niu: College of Business, James Madison University, Harrisonburg, VA 22807, USA

Quarterly Journal of Finance (QJF), 2024, vol. 14, issue 04, 1-33

Abstract: We examine the evolutionary path of companies’ corporate social responsibility (CSR) since their debuts as public companies. We find that firms’ average CSR score is rising over the time they are listed in the public capital market. The phenomenon is likely driven by the number of years the firms have been in the public market. We further find supporting evidence that this pattern of rising CSR since the public listing is more pronounced when the firm is more profitable, holds more cash, has a higher payout ratio, or has more free cash flows. Overall, our findings support the hypothesis that improving CSR performance may not be the priority of most firms new to the public market, but the “public camera effect†is an effective mechanism to assure the growth of CSR assuming the firms remain in the public market.

Keywords: Corporate social responsibility (CSR); initial public offering (IPO); listing age; firm life cycle (search for similar items in EconPapers)
JEL-codes: D22 G34 M14 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S2010139224500137

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