Is Corporate Social Responsibility an Agency Problem? Evidence from CEO Turnovers

Barrios, John Manuel; Fasan, Marco; Nanda, Dhananjay

doi:10.2139/ssrn.2540753

Cited by 8 publications

(5 citation statements)

References 11 publications

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“…This ex ante CSR measure loads with a negative and significant coefficient, but has little effect on the other variables of interest. This suggests that the benefits of blockholder philanthropy are negligible for high CSR firms, which supports our hypothesis of agency costs being most severe in these cases (Barrios, Fasan, & Nanda, ), overwhelming the benefits of principal philanthropy arising from blockholders signing The Giving Pledge…”

Section: Additional Testssupporting

confidence: 82%

The dark side of individual blockholder philanthropy

Shohfi

White

2019

Financial Management

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We examine the market reaction to charitable pledges by individual blockholders of public firms. As this philanthropy may signal a weakening preference for wealth maximization and may be indicative of distraction or relaxed monitoring, these agency costs may overwhelm any reputation benefits. We find decreased firm value and lower pay‐for‐performance sensitivity, the effects of which are most severe where monitoring needs are high, the blockholder is a director, or when the firm has ex ante high corporate social responsibility ratings. Our results are robust to controlling for prior charitable foundation involvement, busy director–blockholders, dual‐class share structures, blockholder exit, and pre‐pledge firm sentiment.

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Section: Additional Testssupporting

confidence: 82%

The dark side of individual blockholder philanthropy

Shohfi

White

2019

Financial Management

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“…A related issue is if CEO turnover affects KLD data (in which case averaging over prior years could be inappropriate). Barrios, Fasan, and Fasan (2014) find that CEO turnover is not significantly associated with changes in CSR scores, consistent with CSR being driven by owners' preferences and not those of managers.…”

Section: A Csr Similarity Measurementioning

confidence: 60%

The Effect of Cultural Similarity on Mergers and Acquisitions: Evidence from Corporate Social Responsibility

Bereskin,

Byun,

Officer

et al. 2018

J. Financ. Quant. Anal.

146

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We study the effect of corporate cultural similarity on merger decisions and outcomes. Using the similarity in firms’ corporate social responsibility characteristics to proxy for cultural similarity, we find that culturally similar firms are more likely to merge. Moreover, these mergers are associated with greater synergies, superior long-run operating performance, and fewer write-offs of goodwill. Our evidence is consistent with the notion that cultural similarity eases post-deal integration. Our results contribute to the literature on the determinants of merger success, provide new evidence on the impact of corporate culture, and offer a new approach to defining firms’ cultural similarity.

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“…International empirical evidence Jo, 2011 andCuadrado-Ballesteros et al, 2015) also supports a positive link between INED presence and a firm's level of socially-responsible investment. Inclusion of ID also helps assess the relative importance of shareowner and board influence on CSR ratings (Barrios et al, 2014). …”

Section: Research Design and Description Of Variablesmentioning

confidence: 99%

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

McGuinness

Vieito

Wang

2017

Journal of Corporate Finance

639

473

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China's recent promotion of Corporate Social Responsibility (CSR) has coincided with a marked increase in the number of Chinese listed firms attracting female board members and foreign equity investors. Using Rankins' (RKS) ratings over the 2009 to 2013 period, we show that greater gender balance in top-management supports stronger CSR performance. This finding broadens gender-based accounts emphasizing social networks (Westphal and Milton, 2000), Critical Mass Theory (Kramer et al., 2006;Bear et al., 2010;and Soares et al., 2011) and team dynamics (Woolley et al., 2010;and Hoogendoorn et al., 2013). Findings also reveal stronger CSR performance in firms with a female CEO. Female leadership thus appears to be just as important as gender mix in driving CSR change.CSR ratings are also increasing in foreign ownership levels. We examine whether a political-networking motivation underlies foreign investment (Du and Girma, 2010;Liu et al., 2014a;Lin et al., 2015;and Jiang and Kim, 2015). We argue that qualified foreign institutional investors (QFIIs) deploy socialengagement in non-SOEs to build competitive advantage. But in SOEs, where strong political networks already exist, QFIIs have less incentive to boost CSR ratings. However, results indicate little difference in the social ratings of QFII-invested SOEs and non-SOEs.Additionally, we confirm the Barnea and Rubin (2010) contention of an inversion in social ratings at entrenched managerial ownership levels. Non-linear rating effects also emerge in relation to state ownership (Li et al., 2013). Finally, CSR performance exhibits positive (negative) relation with a listed entity's size and age (leverage and lagged return-on-equity) but virtually no connection with independent board representation.

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Is Corporate Social Responsibility an Agency Problem? Evidence from CEO Turnovers

Cited by 8 publications

References 11 publications

The dark side of individual blockholder philanthropy

The dark side of individual blockholder philanthropy

The Effect of Cultural Similarity on Mergers and Acquisitions: Evidence from Corporate Social Responsibility

The role of board gender and foreign ownership in the CSR performance of Chinese listed firms

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