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The influence of corporate social responsibility on investment efficiency and innovation
Author(s) -
Cook Kirsten A.,
Romi Andrea M.,
Sánchez Daniela,
Sánchez Juan Manuel
Publication year - 2019
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/jbfa.12360
Subject(s) - corporate social responsibility , mediation , business , investment (military) , value (mathematics) , stakeholder , industrial organization , stakeholder theory , enterprise value , microeconomics , accounting , economics , public relations , management , politics , political science , law , machine learning , computer science
We examine two important channels through which corporate social responsibility (CSR) affects firm value: investment efficiency and innovation. We find that firms with higher CSR performance invest more efficiently: these firms are less prone to invest in negative net present value (NPV) projects (overinvestment) and less prone to forego positive NPV projects (underinvestment). We also find that firms with higher CSR performance generate more patents and patent citations. Mediation analysis indicates that firms with higher CSR performance are more profitable and valuable, consequences partially attributable to efficient investments and innovation. These results, robust to alternate model specifications, lend support to enlightened stakeholder theory.