Competing by conducting good deeds: The peer effect of corporate social responsibility

Sibo Liu and Dejun Wu

Finance Research Letters, 2016, vol. 16, issue C, 47-54

Abstract: How do firms respond to their competitors’ corporate social responsibility (CSR) behavior? We exploit a text-based definition for industry peers to show that the CSR behavior of firms is positively affected by the CSR level of their competitors. The relationship is robust after controlling for firm fixed effects, industry trend, and geographical trend. In addition, the CSR level in turn increases firm value, particularly for firms in highly competitive industries. Taken together, the evidence suggests that a firm's CSR policy is shaped by the peer effect, and managers can influence firm value through CSR behavior.

Keywords: Corporate social responsibility; Industry competition; Peer effect (search for similar items in EconPapers)
JEL-codes: G02 G12 G30 G32 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:16:y:2016:i:c:p:47-54

DOI: 10.1016/j.frl.2015.10.013

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