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

Hannah S. T., SAYARI MARCUM N., Harris F. H. d., Cain C. L.

JOURNAL OF MANAGEMENT STUDIES, vol.58, no.2, pp.421-456, 2021 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 58 Issue: 2
  • Publication Date: 2021
  • Doi Number: 10.1111/joms.12586
  • Journal Name: JOURNAL OF MANAGEMENT STUDIES
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, Periodicals Index Online, ABI/INFORM, Business Source Elite, Business Source Premier, Educational research abstracts (ERA), INSPEC, Psycinfo, Public Affairs Index, vLex, DIALNET
  • Page Numbers: pp.421-456
  • Keywords: corporate social responsibility, financial performance, institutional, social, strategic, and technical CSR, risk management theory, sales and asset growth, stakeholder theory, STAKEHOLDER THEORY, SHAREHOLDER VALUE, RISK, PERFORMANCE, MANAGEMENT, LEADERSHIP, GROWTH, ANTECEDENTS, ISSUES
  • Middle East Technical University Affiliated: Yes

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.