Corporate social responsibility, investor protection, and the cost of equity: Evidence from East Asia

Kun Tracy Wang, Fiki Kartika, Wanbin Walter Wang and Guqiang Luo

Emerging Markets Review, 2021, vol. 47, issue C

Abstract: We document that corporate social responsibility (CSR) activities increase the cost of equity in East Asia. Further, the effect is driven by economies with weak investor protection. Our findings are robust to alternative variable measurements, accounting for endogeneity of CSR, and various methodological specifications. The positive relation between CSR and the cost of equity is attributable to the high agency conflicts in East Asian economies. Our findings highlight that the effect of CSR is contingent on the research context, and emphasize the importance of enhancing investor protection and mitigating agency conflicts for the promotion of CSR.

Keywords: Corporate social responsibility; Investor protection; Cost of equity; East Asia (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:47:y:2021:i:c:s1566014121000091

DOI: 10.1016/j.ememar.2021.100801

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