The effects of social responsibility on company value: a real options perspective of Taiwan companies

Kuo-Jung Lee

Economic Research-Ekonomska Istraživanja, 2019, vol. 32, issue 1, 3835-3852

Abstract: Corporate social responsibility (CSR) is a subject that has garnered considerable attention in recent years. This study conducts the empirical study by using a real options perspective to examine whether a company’s CSR commitment tends to increase its market value. According to Taiwan’s CommonWealth Magazine, this study distinguishes CSR and non-CSR companies. The paper estimates and compares the real options values of CSR and non-CSR companies and shows that high percentage of the company value is attributed to real options. This study finds that a company’s commitment to fulfilling its social responsibility increases its real options value and that the higher the number of CSR Awards won by a company, the higher its real options value. Compared with 10 years ago, investors now pay more attention to companies’ CSR performance. In addition, the higher a company’s size, systematic risk, fixed asset ratio, debt ratio, or skewness in stock returns, the higher a real options value is likely to be.

Date: 2019
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DOI: 10.1080/1331677X.2019.1679213

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