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Does social responsibility begin at home? The relation between firms’ pension policies and corporate social responsibility (CSR) activities

Divya Anantharaman (), Feng Gao () and Hariom Manchiraju ()
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Divya Anantharaman: Rutgers Business School
Feng Gao: Rutgers Business School
Hariom Manchiraju: Indian School of Business

Review of Accounting Studies, 2022, vol. 27, issue 1, No 3, 76-121

Abstract: Abstract Pension freezes are highly visible corporate actions with the potential to hurt the firms’ reputation as “responsible” employers. We document that firms sponsoring defined-benefit pensions step up CSR engagement following announcements of defined-benefit pension freezes. Freeze firms also increase their usage of CSR-related keywords in public disclosures following the freeze. We find a stronger CSR response to more severe freezes, to more controversial cash-balance conversions, and in larger sponsors. This is consistent with CSR increases being motivated by the need to repair one’s reputation. We also find that CSR increases following an accounting rule change that makes pension deficits more visible. Collectively, our findings highlight an important driver of CSR: the need to restore or manage reputation, especially in the face of corporate actions that can hurt stakeholders.

Keywords: Pension freezes, Pension funding, Corporate social responsibility, Corporate reputation; risk-management (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11142-021-09615-7

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