The Direct and Moderating Effects of Endogenous Corporate Social Responsibility on Firm Valuation: Theoretical and Empirical Evidence from the Global Financial Crisis

Abstract

Research has produced inconclusive results concerning the effects of corporate social responsibility (CSR) on firm financial performance, with only 59 percent of studies demonstrating positive effects. Yet, still unaddressed is how CSR impacts the key driver of financial performance-firm growth. We develop new multidisciplinary theory integrating stakeholder and risk management theories with multi-period capital asset pricing. We test the direct and moderating effects of Social, Institutional, Strategic, and Technical CSR using a simultaneous equations model of endogenous CSR and Tobin's q ratio. Our 2004-12 sample of S&P 3000 firms show that all CSR dimensions directly bolster firm performance, while select dimensions moderate the relationship between firms' sales or asset growth and capitalized market value in the periods surrounding the 2008 Global Financial Crisis (GFC). These results deepen understanding of how different forms of CSR influence market value, and refine estimates of CSR's direct and moderating impacts on the growth-value relationship.

Using PLS-SEM to Analyze the Effect of CSR on Corporate Performance: The Mediating Role of Human Resources Management and Customer Satisfaction. An Empirical Study in the Spanish Food and Beverage Manufacturing Sector

“…On the other hand, this research provides a contribution to management literature by considering the CSR as a key business performance tool in SMESs in the food and beverage manufacturer sector, through the analysis of the relationship between CSR practices and performance, and by incorporating the mediating effects of human resource management and customer satisfaction. The inclusion of these two mediating effects seeks to draw the inconclusive results concerning the effect of CSR on firm performance in the research [35]. These results align with previous studies [19,21,22,26], although our research considers them as a whole and not in isolation.…”

Financial Crisis in Management Stress: From the Perspective of Crisis Anxiety of Others

“…Second, state anxiety has a significant positive effect on pressure management. The results are consistent with those of Norris et al ( 2020 ) and Hannah et al ( 2021 ), conforming to the real logic. Crises will break the psychological balance of the managers, cause state anxiety and changes in their cognitive response process, resulting in the decline of thinking and judgment ability, unable to effectively resolve environmental interference, and leading to frustration in adaptation to the market circumstances and pressure management.…”

“…This will lead the existing negative emotions deep in their brain to affect the judgment of the incident itself through the “historical memory”. Hannah et al ( 2021 ) report that the crisis is not just a simple accidental incident, and the management diagnosis and operational risks it triggers are the “clusters” of emotions and contradictions, which may lead to the corporate trust crisis or major management stress driven by various complex environments and conflicts of interest. Accordingly, the present study makes the following hypothesis:…”

Do investors penalize the firms disclosing higher environmental performance? a cross cultural evidence

“…Some studies established a positive relationship between ESG disclosure and firm value in different settings (Matsumura et al, 2013;Qureshi et al, 2020): A UK study indicates a negative correlation (Alsaifi et al, 2020); a US study concludes value relevance of certain ESG attributes (Mǎnescu, 2011); a recent study concludes value irrelevance of environmental pillar of ESG (Jadoon et al, 2021); and another recent study of Chinese firms finds a positive association of CEP with corporate financial performance (CFP) as well as the firm value of financially non-constrained firms; however, this relationship turns negative for financially constrained firms (Akbar et al, 2021). As such, ESG-value nexus is still inconclusive (Fatemi et al, 2018;Hannah et al, 2020) due to short-term-versus-long-term trade-offs experienced by the firms (Delmas et al, 2015) in different settings wherein culture as a value system (Meadows, 1998;Miska et al, 2018) shapes the practices of individuals as well as institutions of society (G. Hofstede, 2001;Ioannou and Serafeim, 2012;Yu et al, 2019). However, none of the previous studies investigating ESG-value nexus used all six cultural dimensions (Geert Hofstede, 1984;Minkov et al, 2013), but some of the studies used some cultural dimensions (Gallego-Álvarez and Ortas, 2017;Hartmann and Uhlenbruck, 2015;Ho et al, 2012;Husted, 2005;Ioannou and Serafeim, 2012;Miska et al, 2018;Park et al, 2007;Ringov and Zollo, 2007) and only one study uses all six dimensions to investigate corporate environmental reporting (Gallego-Álvarez and Ortas, 2017).…”