A Modigliani-Miller Theory of Altruistic Corporate Social Responsibility

Zivin, Joshua Graff; Small, Arthur A.

doi:10.2202/1538-0653.1369

Cited by 69 publications

(44 citation statements)

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“…Rather, the results simply show that on average common law societies invest less in CSR. Indeed, some recent studies consider the extent to which CSR crowds out the provision of public goods provided by other actors (Graff Zivin and Small (), Baron ()). In this sense, the higher levels of CSR in civil law countries may reflect constraints to a larger degree than managerial objectives.…”

Section: Discussionmentioning

confidence: 99%

On the Foundations of Corporate Social Responsibility

Liang

Renneboog²

2017

The Journal of Finance

856

288

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Using corporate social responsibility (CSR) ratings for 23,000 companies from 114 countries, we find that a firm's CSR rating and its country's legal origin are strongly correlated. Legal origin is a stronger explanation than "doing good by doing well" factors or firm and country characteristics (ownership concentration, political institutions, and globalization): firms from common law countries have lower CSR than companies from civil law countries, with Scandinavian civil law firms having the highest CSR ratings. Evidence from quasi-natural experiments such as scandals and natural disasters suggests that civil law firms are more responsive to CSR shocks than common law firms.THE CLASSICAL VIEW IN FINANCE on modern corporations takes a shareholder value maximization perspective, which holds that corporations are accountable only to profit-maximizing shareholders, and apart from their contractually determined obligations, have no responsibility to serve other stakeholders' interests or to enhance society's welfare (Friedman (1970), Bénabou and Tirole (2010)). In reality, however, corporations often focus on objectives beyond profit maximization and participate in activities that improve other * Hao Liang is from Singapore Management University. Luc Renneboog is from Tilburg University. We acknowledge that we are aware of the Journal of Finance's submission guidelines and policies and conflict of interest disclosure policy and that there are no conflicts of interest that exist for this paper. We are very grateful to Andrei Shleifer and Holger Spamann for comments and suggestions on early versions of the paper. We also wish to thank

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Section: Discussionmentioning

confidence: 99%

On the Foundations of Corporate Social Responsibility

Liang

Renneboog²

2017

The Journal of Finance

856

288

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“…A large number of articles consider CSR as a product differentiation strategy, in which firms privately produce public goods to attract consumers willing to pay for ethical attributes (see, e.g. Becchetti et al ., ; Graff Zivin and Small, ; Baron, ; Besley and Ghatak, ). Empirically, opinion polls indeed tend to report an increasing concern for ethical consumption (De Pelsmacker et al ., ).…”

Section: Csr As a Business Strategy In Imperfect Competitionmentioning

confidence: 99%

The Economics of Corporate Social Responsibility: A Firm‐level Perspective Survey

Crifo

Forget

2014

Journal of Economic Surveys

166

121

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This paper analyzes the economics of Corporate Social Responsibility (CSR), as a private response to market imperfections in order to satisfy social preferences. Depending on whether they affect regulation, competition or contracts, market imperfections driving CSR decisions are classified in three categories: public goods and bads and altruism; imperfect competition; and incomplete contracts. We successively present these drivers of CSR decisions and highlight the nature of incentives (external or internal) at work and the testable (and tested) hypotheses in the reviewed studies. We finally review the link between CSR and financial performance, as well as between CSR and social and environmental performance. A twofold discrepancy appears in the literature, opening future research paths: a disconnection between our understanding of CSR drivers and CSR impacts; and a knowledge gap between CSR financial and social consequences, the latter having received little attention.

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“…However, they have a choice to outsource such personal giving by investing in firms that are high in CSP. As such, the theory, as proposed by Baron (2009), allows us to price the firm's social activities in the market, as in Graff-Zivin and Small (2005). The market value (MV) of any firm trading in that capital market can be given by:…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Does Mandatory CSR Reporting Regulation Lead to Improved Corporate Social Performance? Evidence from India

Boodoo

2016

SSRN Journal

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This paper analyses whether mandatory CSR reporting regulation leads to an improvement in corporate social performance. Using a quasi-natural experiment where the Stock Exchange Board of India mandated all companies listed on the Bombay Stock Exchange to disclose their CSR activities and practices, this paper finds that companies significantly improved in all aspects of Environment, Social, and Governance performances. However, governance and social performance improvements were significantly greater than environment performance, which is attributed to the stakeholder salience typology. Potential harm from definitive, dominant and dangerous stakeholders was given greater consideration by management, which improved governance and social performances accordingly.

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A Modigliani-Miller Theory of Altruistic Corporate Social Responsibility

Cited by 69 publications

References 0 publications

On the Foundations of Corporate Social Responsibility

On the Foundations of Corporate Social Responsibility

The Economics of Corporate Social Responsibility: A Firm‐level Perspective Survey

Does Mandatory CSR Reporting Regulation Lead to Improved Corporate Social Performance? Evidence from India

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