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The Direct and Moderating Effects of Endogenous Corporate Social Responsibility on Firm Valuation: Theoretical and Empirical Evidence from the Global Financial Crisis
Author(s) -
Hannah Sean T.,
Sayari Naz,
Harris Frederick H. deB.,
Cain Carol L.
Publication year - 2021
Publication title -
journal of management studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.398
H-Index - 184
eISSN - 1467-6486
pISSN - 0022-2380
DOI - 10.1111/joms.12586
Subject(s) - corporate social responsibility , stakeholder theory , enterprise value , financial crisis , valuation (finance) , tobin's q , capital asset pricing model , business , stakeholder , economics , empirical evidence , asset (computer security) , value (mathematics) , market value , accounting , finance , macroeconomics , public relations , philosophy , epistemology , political science , computer security , management , machine learning , computer science
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.