Despite the significance of corporate social responsibility (CSR), there remains an extensive debate regarding its implications for firm value. This study examines the moderating effects of financial flexibility and R&D investment on CSR and firm value. Using multiple archival data of 2311 companies from 2010 to 2016, our study finds that CSR is a “double-edged sword” for firm value; specifically, CSR significantly increases systematic risk but reduces firms’ idiosyncratic risk as well as the Tobin’s q. Besides, the results indicate that financial flexibility and R&D investment significantly reduce the negative correlation between CSR and Tobin’s q, the difference between the two being that financial flexibility can reduce the positive relationship between CSR and system risk, while R&D spending can reduce the negative relationship between CSR and idiosyncratic risk. By adding new aspects to the discussion about how CSR affects firm value, the results speak to both theorists and practitioners.
Purpose The purpose of this study is to examine the influence of firm performance on corporate social responsibility (CSR) and its possible moderating effect. Despite the significance of CSR, there remains an extensive debate about how it is affected by firm performance. Design/methodology/approach The conceptual model is mainly built on goal-setting theory. Based on archival data from multiple data sets on 1,650 companies, collected from 2010 to 2017, the hypotheses are tested using the two-stage instrumental variable regression method. Findings There is an inverted U-shaped relationship between firm performance and CSR that first increases and then decreases. In addition, considering the boundary conditions, state ownership makes the inverted U-shaped curve steeper, while high executive wage concentration makes the inverted U-shaped curve flatter. Research limitations/implications This study harmonizes the traditional contradictory findings of the influence of firm performance on CSR, that is, it supports a positive, negative or neutral relationship between the two. Originality/value This research provides a necessary structure for the CSR literature. By delving deeply into the relationship between firm performance and CSR, it enables scholars to better address the critical management question of whether earning more will lead to doing good.
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