Essays on financial materiality of corporate social responsibility and corporate strategies

• Main Author: LAN, Yang
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2022
• Subjects: Finance and Financial Management; Strategic Management Policy
• Online Access: https://ink.library.smu.edu.sg/etd_coll/420; https://ink.library.smu.edu.sg/context/etd_coll/article/1418/viewcontent/GPSM_AY2022_PhD_Yang_LAN.pdf
• Institution: Singapore Management University

This dissertation investigates how the endorsement of certain social activities by CSR standards impacts stakeholders’ interpretation on firms’ motivation of doing CSR and how managers make decisions on which specific CSR activities they would like to participate in. The first essay examines how the standards release of CSR by Sustainability and Accounting Standards Board (SASB) affects the relationship between material CSR and firm performance outcomes in terms of stock returns (for investors) and sales growth (for customers), through shaping investor and customer perceptions on the motivation underlying a firm’s material CSR activities. I further argue that a sharp increase in material CSR after the SASB standards release, as a strong indicator of a firm’s opportunistic response to the endorsement, is more likely to be penalized by prosocial shareholders and customers. The second essay explores what drives a firm to select different CSR investment strategies, in terms of the financial materiality of CSR. I posit that firms with stronger financial orientation, which is reflected by more analyst coverage and higher institutional ownership, are more likely to engage in financial material CSR investment, but firms with stronger social orientation, which is reflected by higher female board proportion and more liberal CEOs, are more likely to engage in financial immaterial CSR investment. In addition, these effects are moderated by firm’s financial distress. The empirical results support most of arguments.