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Permanency of CSR Activities and Firm Value

Kwang Hwa Jeong (), Seok Woo Jeong (), Woo Jae Lee () and Seong Ho Bae ()
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Kwang Hwa Jeong: Kangwon National University
Seok Woo Jeong: Korea University Business School
Woo Jae Lee: Chungnam National University
Seong Ho Bae: Kyungpook National University

Journal of Business Ethics, 2018, vol. 152, issue 1, 207-223

Abstract: Abstract This paper investigates whether the pattern of firms’ corporate social responsibility (CSR) activities affects firm value. If firms do permanently CSR activities for strategic purposes, firms’ value is more likely to increase. Using firms known to do CSR in Korea, we examine the valuation effect by adopting an earnings response coefficient (ERC) model and document firms with permanent CSR activities, which show higher ERCs than other firms regardless of the level of CSR activities. This result partly explains the inconsistency among the results of previous studies by showing the differential implication for firm value depending on the CSR activity pattern. Also, the results of our paper imply that investors need to consider the pattern of firms’ CSR activities in their economic decision making.

Keywords: Agency costs; CSR activity permanency; CSR activity pattern; Earnings response coefficients; Strategic behavior; Stakeholder’s view (search for similar items in EconPapers)
Date: 2018
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