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The Moderating Effects from Corporate Governance Characteristics on the Relationship Between Available Slack and Community-Based Firm Performance

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Abstract

Recent perspectives on community investments suggest that they are opportunities for firms to create value for shareholders and other stakeholders. However, many corporate managers are still influenced by a widely held belief that such investments erode profits and are therefore unjustifiable from an agency perspective. In this paper, we refine and test theory regarding countervailing forces that influence community-based firm performance. We hypothesize that high levels of available slack will be associated with higher community-based performance, but that this relationship will be moderated by three important governance variables: board independence, investment fund ownership, and CEO ownership. We find support for our hypotheses in longitudinal study of a large sample of U.S. corporations.

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  1. Robins School of Business, University of Richmond, Richmond, VA, 23173, USA

    Jeffrey S. Harrison

  2. School of Business, Virginia Commonwealth University, Richmond, VA, 23284, USA

    Joseph E. Coombs

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  1. Jeffrey S. Harrison
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Harrison, J.S., Coombs, J.E. The Moderating Effects from Corporate Governance Characteristics on the Relationship Between Available Slack and Community-Based Firm Performance. J Bus Ethics 107, 409–422 (2012). https://doi.org/10.1007/s10551-011-1046-z

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