The Causal Effect of Corporate Governance on Corporate Social Responsibility

Journal of Business Ethics 106 (1):53-72 (2012)
Abstract
In this article, we examine the empirical association between corporate governance (CG) and corporate social responsibility (CSR) engagement by investigating their causal effects. Employing a large and extensive US sample, we first find that while the lag of CSR does not affect CG variables, the lag of CG variables positively affects firms’ CSR engagement, after controlling for various firm characteristics. In addition, to examine the relative importance of stakeholder theory and agency theory regarding the associations among CSR, CG, and corporate financial performance (CFP), we also examine the relation between CSR and CFP. After correcting for endogeneity bias, our results show that CSR engagement positively influences CFP, supporting the conflict-resolution hypothesis based on stakeholder theory, but not the CSR overinvestment argument based on agency theory. Furthermore, firms’ CSR engagement with the community, environment, diversity, and employees plays a significantly positive role in enhancing CFP.
Keywords Corporate social responsibility  Corporate governance  Corporate financial performance  Conflict resolution
Categories (categorize this paper)
DOI 10.1007/s10551-011-1052-1
Options
 Save to my reading list
Follow the author(s)
Edit this record
My bibliography
Export citation
Find it on Scholar
Mark as duplicate
Request removal from index
Revision history
Download options
Our Archive


Upload a copy of this paper     Check publisher's policy     Papers currently archived: 30,813
Through your library
References found in this work BETA
The Politics of Stakeholder Theory.R. Edward Freeman - 1994 - Business Ethics Quarterly 4 (4):409-421.

View all 15 references / Add more references

Citations of this work BETA
Doing Well While Doing Bad? CSR in Controversial Industry Sectors.Ye Cai, Hoje Jo & Carrie Pan - 2012 - Journal of Business Ethics 108 (4):467 - 480.

View all 31 citations / Add more citations

Similar books and articles
Stakeholder Influence Capacity and the Variability of Financial Returns to Corporate Social Responsibility.Michael L. Barnett - 2005 - Proceedings of the International Association for Business and Society 16:287-292.
Good Corporate Governance Initiative to Ensure Corporate Social Responsibility.Rama B. Rao - 2007 - International Corporate Responsibility Series 3:395-414.
Corporate Social Responsibility.Paul C. Godfrey, Nile A. Hatch & Jared M. Hansen - 2005 - Proceedings of the International Association for Business and Society 16:112-117.
Added to PP index
2012-02-07

Total downloads
114 ( #45,088 of 2,202,697 )

Recent downloads (6 months)
5 ( #44,528 of 2,202,697 )

How can I increase my downloads?

Monthly downloads
My notes
Sign in to use this feature