Corporate Social Responsibility and Investment Efficiency

Benlemlih, Mohammed; Bitar, Mohammad

doi:10.1007/s10551-016-3020-2

Cited by 435 publications

(249 citation statements)

References 53 publications

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“…Our results suggest that an improved CSR managerial attitude could contribute to boost long-term value-enhancing activities (i.e., real investments in tangible fixed assets). This corroborates the findings of prior empirical studies [101,102] and insights suggested in previous research (see, e.g., [72,103,104]). Furthermore, the results obtained by using Equations (2 a ), (2 b ), and (2 c ) allow us to conclude that each environmental, social, and governance aspect of CSR activities must be differently managed in line with specific business and sustainability material issues as well as in the light of the different effects on investment activities.…”

Section: Resultssupporting

confidence: 93%

Corporate Social Performance, Financialization, and Real Investment in US Manufacturing Firms

2019

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In recent years, the global financial and economic crisis are rewriting the relationship between business and society, focusing, among other things, on the role of the process of financialization, not only in the economy as a whole but also within non-financial companies. Shareholder value maximization, together with the commoditization of business, has led to a general short-term approach at the expense of capital accumulation and core business activity, to the detriment of not only firms’ competitiveness and productivity but also of human capital, strategic innovation, business ethics, and long-term growth. Within this framework, this study investigates the role of corporate sustainability, analyzing the nexus between financialization, accumulation of real capital, and corporate social performance, an issue that has been neglected so far. Using a sample of US manufacturing firms from 2002 to 2017, we found that, while financialization was negatively correlated with corporate real investment, the environmental and social firm performance positively impacted corporate capital accumulation. Our results support the belief that a focus on environmental, social, and governance standards, fostering real investments, may enhance a firm’s long-term growth with a positive effect on its long-term value.

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Section: Resultssupporting

confidence: 93%

Corporate Social Performance, Financialization, and Real Investment in US Manufacturing Firms

2019

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“…Also, enterprises that strategically engage in CSR are likely to innovate their product and process to meet stakeholders' desires, which brings them distinguished competitive advantages for long-term performance growth [16,17]. Externally, CSR disclosures can improve corporate governance ratings [49], decrease information asymmetry [50], increase confidence in capital market [51], create access to finance [52], reduce investment-cash flow sensitivity [53], and improve investment efficiency [21]. Besides, the good reputation brought by CSR contributes to increasing customer satisfaction [18,20], bringing political benefits [54], and reducing social constraints in business operations [26].…”

Section: Csr and Organizational Resiliencementioning

confidence: 99%

“…Accordingly, consistent with the mainstream view [6-10], we operationalize organizational resilience as the ability to achieve both high-level performance growth and low-level financial volatility over a long term.Then, we analyze the impact of CSR on firms' long-term growth and financial volatility respectively through the theoretical lens of CSR's performance-enhancing and performance-insuring mechanisms. The performance-enhancing view holds that CSR can promote performance growth by improving employee satisfaction and retention [11][12][13], social image [14], innovation performance [15][16][17], customer satisfaction [18,19], brand equity [20], investment efficiency [21]. The performance-insuring view on the other hand, claims that CSR can provide buffers and supports to absorb shocks, undertake appropriate responses when a company suffers from crises and adverse events, thus mitigating negative impacts and financial volatility [22,23].…”

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confidence: 99%

What Dimension of CSR Matters to Organizational Resilience? Evidence from China

Wei

et al. 2019

Sustainability

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Prior work on corporate social responsibility (CSR) has focused mainly on its effects on the short-term performance of firms from developed countries. In this article, we shed light on its effects on organizational resilience, which is defined as the firm's ability to positively cope with environmental turbulence, and operationalized by long-term, improved sales growth and financial volatility. In line with this operationalization, we adopt CSR's performance-enhancing and performance-insuring mechanisms to disentangle the relationship between CSR and organizational resilience. Furthermore, we divide CSR into five dimensions, namely shareholder, employee, business, society and environment-related CSR, and respectively examine their impacts on organizational resilience. The empirical study on a large sample of public firms in China from 2010 to 2017 shows that CSR as a whole significantly increases the firms' long-term growth and reduces their financial volatility. As for the five specific dimensions, they all have a significant negative effect on financial volatility, and the employee, business, environment-related CSR are positively associated with long-term growth. Yet, the empirical results did not indicate significant associations between shareholder and society-related CSR and firms' long-term growth. This study first explores the impacts of CSR's different dimensions on organizational resilience. Also, we contribute to enriching the literature on CSR by examining the long-term performance-insuring effect of CSR with a quantitative analysis of emerging markets. Finally, we discuss some important managerial implications, as well as promising directions for future research.2 of 23 conditions, unestablished industrial structures, and the intense, chaotic competition brought by rapid development, Chinese enterprises are likely to face more changes and uncertainties in their business environment, which makes them more vulnerable than those from developed countries. Second, as the concern about CSR in China comes far later than that in developed countries, the effect of Chinese CSR on organizational resilience may be different. The Kinder, Lydenberg, and Domini (KLD) database, for example, began to internationally provide ratings of corporate social performance in 1991. While, the first official research report on Chinese CSR was released in 2009, and then Chinese listed companies were required to issue their annual CSR reports. In line with this, we aim at providing some new insights of CSR and its effects on organizational resilience with evidence from emerging markets.In doing so, we first clarify the conceptualization and operationalization of organizational resilience. Defined as the ability of an organization to respond positively to environmental changes, organizational resilience is a latent, unobservable construct usually measured by its outcomes [6]. The most desired outcome of organizational resilience recognized in extant literature is a firm's persistent superior performance in the changing business en...

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“…CSR reduces agency problems and asymmetric information, which leads to an increase in investment efficiency. Benlemlih and Bitar (2018) have found a positive effect of CSR on investment efficiency in U.S. firms from 1998-2012, which was confirmed by Cook et al (2017) using the data from 1992 to 2009 [29,47]. Information asymmetry, which the most important role of environmental information disclosure aims to reduce, is one of the important reasons for principal-agent problems.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 85%

Does Environmental Information Disclosure Make Firms’ Investments More Efficient? Evidence from Measure 2007 of Chinese A-Listed Companies

2020

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Using a sample of 2822 Chinese A-listed firms over the 2002–2015 period and the propensity score matching with difference-in-differences (PSM-DID) approach, we estimate the causality of environmental information disclosure (EID)’s impact on investment efficiency based on a quasi-experiment in 2007. This paper finds strong and robust evidence that there is a significant positive connection between EID and company investment efficiency in China. We further determine that heterogeneity of EID’s performance appears in the different settings of industry and subdivision industries. The significance of several sub-industries disappeared while the others retained larger significant coefficients than the whole industry case. The probability that an enterprise issues an environmental annual report has a significant positive link with investment efficiency in heavy industry, while this relationship is weakened or even not obvious in non-heavy polluting industries. Finally, we find that employee compensation serves as a mediator from which EID has an indirect effect on investment efficiency. Our results confirm that EID plays a vital role in firm-level capital allocation efficiency.

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Corporate Social Responsibility and Investment Efficiency

Cited by 435 publications

References 53 publications

Corporate Social Performance, Financialization, and Real Investment in US Manufacturing Firms

Corporate Social Performance, Financialization, and Real Investment in US Manufacturing Firms

What Dimension of CSR Matters to Organizational Resilience? Evidence from China

Does Environmental Information Disclosure Make Firms’ Investments More Efficient? Evidence from Measure 2007 of Chinese A-Listed Companies

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