Corporate social responsibility, firm value, and influential institutional ownership

Buchanan, Bonnie; Cao, Cathy Xuying; Chen, Chongyang

doi:10.1016/j.jcorpfin.2018.07.004

Cited by 394 publications

(276 citation statements)

References 79 publications

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“…In contrast, the ‘overinvestment hypothesis’ suggests that CSR might have a negative impact on stock performance. According to the agency theory, managers increase CSR expenditures to build their own reputation at the cost of shareholders, which leads to a decrease in firm value (Brown et al ., ; Barnea and Rubin, ; Buchanan et al ., ). Specifically, Ziegler et al.…”

Section: Introductionmentioning

confidence: 97%

“…There have been a number of studies on the impact of CSP on institutional investors, but there are no consistent conclusions. Some scholars find that there is no relation between CSP and institutional investors (Coffey and Fryxell, ), while others find a positive correlation between them (Graves and Waddock, ; Johnson and Greening, ; Cox et al ., ; Buchanan et al ., ). Some find that the CSR activities of IPO firms can cause institutional investors concern and produce market reactions (Cai and He, ; Muhammad et al ., ; Reverte, ).…”

Section: Introductionmentioning

confidence: 97%

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The IPO corporate social responsibility information disclosure: Does the stock market care?

Huang

Xiang

Liu

et al. 2019

Accounting & Finance

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We create textual information indices using corporate social responsibility (CSR) information extracted from IPO prospectuses in China. We use the indices to measure the issuers' corporate social performance (CSP) and corporate environmental performance (CEP) and assess how the stock market reacts. We find that CSP disclosure is significantly related to the post-market performance of the firm. Specifically, better CSP disclosure is correlated with higher post-IPO listing holding period returns among firms that do not disclose donations or environmental expenditures, although the association does not hold for firms that make donations and environmental expenditures. In addition, institutional investors seem to care more about the CEP information for a firm than the CSP information.

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Section: Introductionmentioning

confidence: 97%

Section: Introductionmentioning

confidence: 97%

The IPO corporate social responsibility information disclosure: Does the stock market care?

Huang

Xiang

Liu

et al. 2019

Accounting & Finance

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“…Buchanan [32] points out that community social capital promotes CSR and moderates the CFP-CSR relationship. The effect of CSR on a company's value varies depending on the level of influential institutional property.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

“…Grid of CSR Perceptions-Observations of International Experts on CSR Regarding Economic Theories and Concepts; Source[15][16][17][18][19][20][21][22][23][24][25][26][27][28][29][30][31][32].…”

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confidence: 99%

Analysis of Social Responsibility and Reporting Methods of Romanian Companies in the Countries of the European Union

et al. 2018

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In the context of the current economy, the concept of corporate social responsibility has gained momentum, and its significance derives from the attitude of companies that have understood the importance of the impact of their activity on the environment in which they conduct their operations. The present study emphasizes the fact that CSR has an equal importance for those companies of varying sizes that operate in developing countries, such as Romania. There are still a lot of challenges regarding their implementation. The study focuses on establishing the level of CSR report by the Romanian companies within the European Union framework by taking into account the extent to which they are familiar with the CSR reporting guidelines in order to identify the degree of applying the Global Reporting Guidelines (GRI) when designing the sustainability reports. The data regarding the acceptance of the voluntary report and its correlation to the sustainable development as a strategic focus of the management of entities, the usefulness, the necessity and the obstacles of voluntary reporting were gathered based on a questionnaire. Between 2015-2017, 61 Romanian companies of various sizes had to answer specific questions. The research is based on the descriptive statistics as well as the correlation analysis method. The findings of the research proved that the acceptance of the management in terms of the sustainable development is in a close relationship with implementing voluntary reporting and the willingness to develop a favorable image of the company within a competitive market. The study also identified the differences that exist between a company's success on the market that is linked to their development and the economic factors that characterize each and every field of activity. The present study focuses on defining the term 'social responsibility' from the point of view of its concepts. It also aims at presenting the social responsibility reporting methods used by the companies from the European Union countries. These can be a starting point for those companies that have not had the chance of applying them yet.In developed countries, companies have understood the importance of CSR for their business strategy and at the same time, the importance of stakeholder engagement in their business, as the later become more and more interested in the moral behavior of companies. Within the present-day context of an increasing globalization, the growth of the international transactions and the development of the corporate phenomena through enhancing the presence of the multinational companies as emerging entities, the traditional financial reporting models are not tailored face the challenges of disclosing all the significant facets that lead to adequate CSR and the sustainable development forecasting capacity needed by companies. Thus, one can state that the traditional financial reporting no longer meets all the information needs of the stakeholders [1], and the solution comes from the companies in the form of voluntary report...

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“…According to previous research works done by Sheikh [14], Lee, and Heo [39] and Buchanan et al [17], the firm value is determined by Tobin's Q, which is computed as the market value of assets divided by the book value of assets. The market value of assets is the market value of equity plus the book value of assets minus the book value of common equity net of deferred taxes.…”

Section: The Dependent Variablementioning

confidence: 99%

The Influences of CSR’s Multi-Dimensional Characteristics on Firm Value Determination by a Fusion Approach

Lin

Liu

et al. 2018

Sustainability

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Corporate social responsibility (CSR) implementation has been widely acknowledged as playing a key part in enhancing firm value as well as achieving sustainable development. However, up to now the extant works in the literature have yielded non-conclusive results regarding the relationships between CSR and firm value. One of the possible reasons is that the studies ignore the multi-dimensional characteristics of CSR-that is, they merely utilize a singular synthesized indicator as a proxy to represent the corporate's CSR performance as being unreliable and problematic. Thus, this study breaks down CSR into numerous dimensions and further examines each dimension's impact on firm value. By doing so, managers can allocate their firm's valuable resources to suitable areas so as to increase its reputation and value. In addition, this research sets up an artificial intelligence (AI)-based fusion model, grounded by fusion learning theory that aims at complementing the error made by a singular model, to examine the relationship between CSR's multidimensional characteristics and firm value. Through different combinations of adopted strategies, users can realize the most representative features from an over-abundant database. value of total liabilities, and sales to total assets) so as to discriminate between healthy corporates and non-healthy corporates. Although this model performs a satisfactory job in forecasting quality, it also comes with some statistical challenges, such as linear separability, independent predictors, and multivariate normality that usually do not hold in real applications. To overcome these obstacles, the literature has proposed the linear probability model (LPM) and logit or probit regression models. Meyer and Pifer [4] employed LPM to handle the task of the corporate financial bankruptcy forecasting task. Martin [5] assessed banks' financial troubles by relying on a logit model. Dimitras et al. [6] provided a detailed review of statistical-based approaches in financial crisis forecasting, indicating that the logit model achieves optimal forecasting performance.In contrast with those studies that have broadly examined financial crisis prediction and credit risk forecasting, very few have looked into firm value forecasting. Poor firm management is widely recognized as being the main trigger for a financial crisis, and thus firm value can appropriately reflect the quality of corporate management. If managers can run their business with efficiency and target maximizing shareholders' wealth, then investors will likely pay more than average to own their stock.

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Corporate social responsibility, firm value, and influential institutional ownership

Cited by 394 publications

References 79 publications

The IPO corporate social responsibility information disclosure: Does the stock market care?

The IPO corporate social responsibility information disclosure: Does the stock market care?

Analysis of Social Responsibility and Reporting Methods of Romanian Companies in the Countries of the European Union

The Influences of CSR’s Multi-Dimensional Characteristics on Firm Value Determination by a Fusion Approach

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