Aiming for average: The effect of peer standing on the dynamic process of corporate social responsibility

• Main Authors: DING, Kuan Yong David, FERREIRA, Christo, UDOMSAK, Wongchoti
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2012
• Subjects: Corporate Social Responsibility; CSR; Environmental Social Governance; ESG; Finance and Financial Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5219; https://ink.library.smu.edu.sg/context/lkcsb_research/article/6218/viewcontent/SSRN_id1971484.pdf
• Institution: Singapore Management University

We evidence a non-linear relationship between firm value and corporate social responsibility, adding to the mixed evidence on this relationship. We show that corporate social responsibility exhibits a dynamic process, which is largely dependent on a firm’s industry, relative standing amongst peers and the distinction between responsible and irresponsible behavior. Surprisingly, we find that responsible behavior could sometimes destroy firm value, while irresponsible behavior could sometimes increase firm value. Endogeneity is mitigated through a novel process that allows us to keep constant the endogeneity inherent in this field, examining corporate social responsibility’s effect on firm value separately.