Firms face a great deal of pressure to engage in the heightened debate about climate change policies and practices. Building on the corporate political strategy literature, the authors evaluate how firms choose to influence those policies when faced with pressure from shareholders and activists. The authors triangulate firms’ choice of corporate political activity (CPA) with their environmental performance to draw out whether performance affects the firm’s choice of engagement level in CPA. The authors find that firms in the S&P 500 (...) use a form of constituency-building (CB) more often than a financial-incentive (FI) tactic and that environmental performance moderates this choice. To date, there is little research connecting corporate political activity and climate change policies and performance. This research is intended to contribute to this literature gap. (shrink)

This study examines the influence of mood on corporate philanthropic giving. Drawing on group emotions theory and affect-infused decision theory, we advance the argument that firms allocate greater resources to philanthropy when headquarters-based employees are in a more positive affective state. We also describe three boundary conditions in this relationship—executives’ embeddedness in the firm, executives’ latitude to engage in philanthropic giving, and the firm’s track record of corporate social irresponsibility. We test our arguments using a longitudinal dataset of philanthropic giving (...) by U.S. firms. Our study contributes to the literature by shedding light on the role of affect in shaping the decision to allocate resources to corporate philanthropy. (shrink)

Considerable interest exists regarding the media’s influence on corporate reactions, but the link between media visibility and corporate philanthropic response is not clear. Natural disasters thus provide an environment that makes visible the general processes relevant to that link. Based on agenda-setting theory, stakeholder theory, and impression-management theory, we propose that corporations that are highly visible in the news media are more likely to engage in CPR and donate more money. We also propose that companies with reputations for irresponsibility or (...) vulnerability strengthen that tendency. Data from Chinese firms after the Wenchuan earthquake on May 12, 2008, and the corresponding empirical results support our hypotheses. This study also shows that CPR is an active conduit for deflecting undesired reputations. (shrink)

Previous studies have proposed a virtuous circle between corporate social performance (CSP) and corporate financial performance (CFP). However, a key challenge researchers face when empirically examining this virtuous circle is endogeneity. In this paper, we apply a well-developed method—dynamic panel data (DPD) estimation—to account for endogeneity and conduct two studies to reexamine the causal relationship between CSP and CFP. Study 1 relies on KLD ratings from 1997 to 2012 as the measure of CSP. According to the results of Study 1, (...) although CFP measured as ROE may have a causal impact on CSP, it is doubtful whether there is a causal influence of CSP on CFP. Study 2 relies on the sustainability scores provided by Sustainalytics from 2009 to 2018 as the measure of CSP. Study 2 reports that CSP does not causally influence CFP and that CFP does not have a causal impact on CSP. Together, Study 1 and Study 2, using different measures for CSP, suggest that a virtuous circle between CSP and CFP may not exist. Our study suggests that doing good may not necessarily lead to doing well and that doing well may not naturally result in doing good. Thus, our study implies that future studies should seriously consider the causal mechanisms through which CSP may influence or may be influenced by CFP. Our paper also discusses the implications for CSP research and for management and organization research. The limitations of applying DPD estimation to empirically examine the causal relationship between CSP and CFP are also discussed. (shrink)

Although the composition of the board of directors has important implications for different aspects of firm performance, prior studies tend to focus on financial performance. The effects of board composition on corporate social responsibility (CSR) performance remain an under-researched area, particularly in the period following the enactment of the Sarbanes-Oxley Act of 2002 (SOX). This article specifically examines two important aspects of board composition (i.e., the presence of outside directors and the presence of women directors) and their relationship with CSR (...) performance in the Post-SOX era. With data covering over 500 of the largest companies listed on the U.S. stock exchanges and spanning 64 different industries, we find empirical evidence showing that greater presence of outside and women directors is linked to better CSR performance within a firm’s industry. Treating CSR performance as the reflection of a firm’s moral legitimacy, our study suggests that deliberate structuring of corporate boards may be an effective approach to enhance a firm’s moral legitimacy. (shrink)

This study examines the relation between a firm’s business strategy and its corporate social responsibility performance. Using a comprehensive measure of business strategy based on the Miles and Snow theoretical framework, we find that firms following an innovation-oriented strategy are associated with better CSR performance than those following an efficiency-oriented strategy. Specifically, compared with defenders, prospectors engage in more socially responsible activities, fewer socially irresponsible activities, and perform better in both stakeholder- and third-party-related CSR areas. Taken together, our results suggest (...) that business strategy is an important determinant of CSR performance. Prospectors take advantage of CSR, as their innovation-oriented strategy allows them not only to benefit more from CSR, but also to have more tolerance for the uncertainty, risk, and long time-horizon associated with CSR engagement. (shrink)

This study examines the role of responsible entrepreneurship among female entrepreneurs by examining how and when responsible entrepreneurship may exert a positive influence on female entrepreneurial success. Using the data collected from 337 Chinese female entrepreneurs, and by integrating responsible entrepreneurship research with a dynamic capability framework, our findings show, firstly, that responsible entrepreneurship is positively correlated to female entrepreneurial success; secondly, this relationship is mediated by female entrepreneurs’ opportunity recognition; and thirdly, the indirect effect of responsible entrepreneurship on female (...) entrepreneurial success through opportunity recognition is weaker when women entrepreneurs perceive more gender discrimination. Furthermore, using a post hoc analysis, we find that responsible entrepreneurship has a positive impact on entrepreneurial success for both male and female entrepreneurs, but that this impact is more significant for female entrepreneurs than for their male counterparts. With the contextual factor of traditional female social stereotypes inadvertently contributing to greater gender discrimination in the field of entrepreneurship, our results underscore the importance of both responsible entrepreneurship and opportunity recognition in promoting female entrepreneurial success. (shrink)

This study revisits the relation between corporate performance and corporate social responsibility in the context of a major shift in firms’ credit risk status. Relying on corporate credit rating as a performance indicator, we examine whether firms under the scrutiny of rating agencies trade-off CSR engagement for credit quality improvement. To explore whether firms adjust their CSR engagement after a focal rating change, we focus on the investment–speculative grade threshold because of its importance in accessing the public debt market. We (...) find that firms that lose the investment grade rating subsequently increase CSR engagement. We also uncover that improving CSR engagement helps firms restore their credit ratings ex post. Our findings support the view of CSR engagement as a valuable risk management strategy. (shrink)

The corporate financial performance (CFP)–corporate social performance (CSP) relationship has been investigated many times over the past few decades, yet the notion of CSP has generally been understood to be a single, monolithic aspect of corporate strategy. This article examines the common CFP–CSP understanding in three distinct ways: (1) by extending the evaluation of CSP as a complex, multistakeholder notion; (2) by analyzing CSP's relationship with the firm's financial performance at a given point in time as a lead (independent) variable (...) in the relationship and as a lag (dependent) variable in the relationship; and (3) for both positive and negative stakeholder relationships. The results indicate that the employee emerges as the stakeholder group most strongly linked to CFP, followed by the consumer stakeholder. The natural environment and the community stakeholder group are minimally associated with CFP. General support is found for a CFP–CSP relationship at a given point in time, with some support found for CSP as a lead (independent) variable. When used as a measure of financial performance, return on assets is more often correlated with CSP than is return on equity. These results and their implications are discussed. (shrink)

The goal of this paper was to investigate whether and how a firm that engages in different kinds of corporate social performance can create a favorable corporate reputation among its stakeholders, and as a result achieve a good financial performance. Building on stakeholder theory, we distinguish two types of reputation—reputation among public stakeholders and reputation among financial stakeholders. We argue that CSP activities affect these two reputations differently. In addition, we empirically test the relationship among different types of CSP, reputation (...) among public and financial stakeholders, and financial performance. Our results suggest that Carroll’s four types of CSP affect financial performance differently, and their effects are mediated by reputation among public and financial stakeholders. Our findings provide guidelines for managers on choosing to emphasize certain CSP aspects in their communication, depending on the specific stakeholder group they are targeting. (shrink)

We draw upon the attention-based view of the firm to identify the conditions under which community influentials (CIs) on a board impact a firm’s corporate social performance (CSP). We test our hypotheses with a panel data set of Fortune 500 firms from 2004 to 2008, including 3,955 unique firm–director combinations (aggregated to the board level). Although CIs are often considered less powerful directors, we identify that when the firm is experiencing poor CSP, CIs have a positive effect on CSP. The (...) ability of CIs to influence CSP is also conditional on the access of CIs and other board members to socially oriented board ties. Our article points out that power and influence is contingent on the decision context and the relative knowledge of organizational players, and that players with relatively lower power may improve their status and command attention when they can offer exclusive insight into important issues. (shrink)

Corporate environmental performance (CEP) has been of fundamental interest in scholarly research during the last few decades. However, there is a great deal of disagreement pertaining to the definition, conceptualization, and adequate measurement of CEP. Our study addresses these issues and provides a methodologically rigorous and comprehensive examination of content validity and construct validity. By integrating the available literature on CEP, we derive a parsimonious definition and theoretically sound framework of the focal construct. Drawing on non-aggregated and publicly available data (...) for a sample of 706 firm-years, we test the construct validity of this framework by means of factor analysis. Our results provide evidence for the multidimensional nature of the focal construct. By contrasting our findings with existing measurement approaches in empirical research, we emphasize several deficiencies with regard to the inferences and conclusions yielded in prior research. Future empirical and practically oriented studies can build on our findings and thus provide more stringent results. (shrink)

The aim of this study is to analyse how secondary stakeholders influence managerial decision-making on Corporate Social Responsibility disclosure. Based on stakeholder salience theory, we empirically investigate whether differences in environmental disclosure among companies are systematically related to differences in the level of power, urgency and legitimacy of the environmental non-governmental organisations with which these companies are confronted. Using proprietary archival data for an international sample of 199 large companies, our results suggest that differences in environmental disclosures between companies are (...) mainly associated with differences between their environmental stakeholders’ legitimacy. The effects of power and urgency are of an indirect nature, as they are mediated by legitimacy. This study improves our understanding of CSR disclosure by demonstrating that, next to the well-documented effect of company characteristics, stakeholder characteristics are also important. Besides, it provides scarce empirical evidence that not only primary stakeholders, but also secondary stakeholders are influential with regards to management decision-making. And more specifically, it offers insight into why some stakeholder groups are better able to influence disclosure decisions than other. The results also have important practical implications for managers of both environmental NGOs and large companies. For managers of environmental NGOs the results provide evidence of the most successful tactics for having their environmental information demands satisfied by companies. For company management the results provide insights into the most important stakeholder characteristics, on the basis of which they may develop strategies for proactively disclosing environmental information. (shrink)

This paper analyzes the determinants underlying the internalization of proactive environmental management proposed by certifiable environmental management systems such as those set out in ISO 14001 and the European Management and Auditing Scheme. Using a study based on 232 usable questionnaires from EMAS-registered organizations, we explored the influence of institutional pressures from different stakeholders and the role of corporate strategy in the “substantial” versus “symbolic” integration of environmental practices. The results highlighted that although institutional pressures generally strengthen the internalization of (...) proactive environmental practices, the influence of stakeholders can either support the integration of these practices or encourage their superficial adoption. For example, while pressure from suppliers and shareholders contribute to corporate greening, pressure from customers and industrial associations tend to encourage greenwashing. Product quality-oriented strategies also positively influence EMS internalization. The paper sheds light on the institutional complexity underlying the substantial versus symbolic implementation of environmental practices, and questions the dominant isomorphic view of EMS adoption. The paper also bridges the gap between complementary approaches on corporate greening, notably neo-institutional and stakeholder theories. (shrink)

Although high-performance human resource practices do not directly affect corporate social performance strengths, they do positively affect CSP strengths in companies that are highly innovative or have high levels of slack. High-performance human resource management practices also directly and negatively affect CSP concerns. Drawing on the resource-based view and using secondary data from an objective, third-party database, the authors develop and test hypotheses about how high-performance HRM affects a company’s CSP strengths and concerns. Findings suggest that HRM and innovation are (...) important capabilities because they create and enhance other capabilities. (shrink)

Competitor pressure is one of the major reasons that a SME engages in environmentally friendly or damaging activities. Extant research has argued that environmental strengths and concerns have mirror opposite relationships with stakeholder antecedents as well as with performance outcomes. We suggest this argument does not reflect the reality. Building on stakeholder management and Red Queen theories, we hypothesize that environmental strengths and concerns have differential relationships with competitors–firm power exchange and financial performance for Chinese SMEs. Results of ten interviews, (...) a pretest, and a large-scale field study indicate that competitors–firm power divergence has a positive relationship with environmental strengths, yet the link between this divergence and environmental concerns does not exist. Further, environmental strengths mediate the relationship between competitors–firm power divergence and financial performance of Chinese SMEs. (shrink)

This article seeks to go beyond the implied assumption from previous research that job candidate attraction to corporate social practices is equivalent across individuals. To this end, we propose a framework for categorizing individuals' attraction to different corporate social performance profiles. Our framework is grounded in relational models theory and Mitroff's model of managers' “ideal organizations.” An inductive approach was used to elaborate upon the model and assess the extent to which candidates preferences vary. Data were collected from prospective job (...) seekers regarding their attraction to social practices that benefit or harm various stakeholders, and these responses were used to develop profiles of job candidates' attraction to distinct profiles of organizations' social practices. The results provide a guide for managers who wish to improve the likelihood that an organization's social practices reflect what is best about its culture. (shrink)

This paper examines the effect of corporate social responsibility on the number of bond covenants. We find that a high CSR score has a negative association with the number of bond covenants. Moreover, our results are more pronounced for firms with a high bid-ask spread and high agency costs. Our analysis highlights the effect of the good stakeholder relationship on the bond contracts.

The vast majority of extant empirical research examining the relationship between corporate social performance and financial performance selects samples of only those firms which are observed engaging in CSP. In this study, the authors assert that firms’ efforts to pursue CSP and subsequently their appearance in social-choice investment advisory firms’ ranking databases are non-random. Studying the CSP–FP link using selected samples of only those firms whose social performance is ranked by SIA firms introduces a sample-selection bias which limits generalization of (...) results to a population of all firms, and at worst provides alternate explanations for observed relationships. The authors test these assertions on a large sample of public corporations in the United States over 6 years and find a sample-selection bias. Upon correction of this bias, this study confirms the positive impact of CSP on FP. (shrink)

This article examines the concurrent validity of the Kinder, Lydenberg, Domini Research & Analytics corporate social performance measures. Because KLD changed its evaluation methods to richer approaches, a new look at the concurrent validity of the indicators is necessary. To do this new look, the authors examine the new “Binary” and “Continuous” versions of the KLD and compare them with previous versions of KLD. The results suggest that the continuous scores provide better measurement characteristics than do the binary version. Overall, (...) the new versions of the KLD data demonstrate concurrent validity with the original version. (shrink)

Different proprietary databases have been used extensively in research to assess the environmental performance and environmental risk of companies. This study explores the convergent validity of the environmental ratings of MSCI ESG STATS, Thomson Reuters ASSET4 and Global Engagement Services. The study shows that the ratings have common dimensions, but on aggregate, they do not converge. On the environmental opportunity side, KLD environmental strengths, and ASSET4 and GES environmental performance metrics correlate highly and provide convergent scores for US companies from (...) 2003–2011. On the environmental risk side, KLD environmental concerns converge with the GES environmental industry risk and company emissions from the ASSET4 database. Further analysis confirms that industry-related risks are drivers of company-specific environmental performance. (shrink)

This study complements previous empirical research on the business case for corporate social responsibility (CSR) by employing hitherto unused data on corporate social performance (CSP) and proposing statistical analyses to account for bi-directional causality between social and financial performance. By allowing for differences in the importance of single components of CSP between industries, the data in this study overcome certain limitations of the databases used in earlier studies. The econometrics employed offer a rigorous way of addressing the problem of endogeneity (...) due to simultaneous causality. Although the study’s results provide no evidence that there is a generic or universal business case for CSR, they indicate that there is a strong link between single stakeholder-related issues of CSR and financial performance. However, the analysis does not establish causality within these relationships. (shrink)

In the last two decades, there has been a pronounced growth of CSR rating agencies that assess corporations based on their social and environmental performance. This article investigates the impact of CSR ratings on the behavior of individual corporations. To what extent do corporations adjust their behavior based on how they rank? Our primary finding is that being dropped from a CSR ranking appears to do little to encourage firms to acknowledge and address problems related to their social and environmental (...) performance. Specific rankings appear not to have a widespread effect of influencing firms to acknowledge negative CSR events and publicly present plans and actions to address them. Whether firms are well or poorly ranked, they appear to focus on and publicly discuss their “positive” CSR activities. We discuss the wider significance of these results as well as the overall significance of CSR rankings for a global economy. (shrink)

This study investigates the connection between corporate social responsibility (CSR) and corporate reputation among the public using fuzzy set qualitative comparative analysis (fsQCA). To examine complex processes underlying the reactions of this influential stakeholder group, hypotheses are drawn from the category diagnosticity approach. Thereby, a psychological model of perceived (im)morality is transferred to the CSR context. In line with these hypotheses, positive/negative CSR activities influence reputation in the expected directions (H1a, b), while the effects of specific configurations of CSR activities (...) reveal an asymmetry suggesting a negativity bias (H2). Further analyses confirm that positive effects require a consistent positive performance regarding prior reputations (H3a) and the aggregated CSR activities of several previous years (H3b, c). Moreover, the relevant patterns vary between industries (H4). The present study thus contributes to CSR research by investigating a powerful but hitherto understudied stakeholder group through a category diagnosticity lens combined with a configurational approach to analysis. (shrink)

In recent years, the debate about the role of the Public Institutions in the fields of corporate social responsibility and sustainable development has gained momentum. Nevertheless, the ambiguity of the latter concepts makes it difficult both to measure them and to estimate the impact that the different public initiatives may have on them. In this sense, the present research has the aim to design a fuzzy logic-based methodology applied to the evaluation of the above-mentioned processes in relation to the state-aid (...) policies for the European industry. Regarding the study contour, the European Union state aids seems not to have introduced important changes leading to socially responsible results and, therefore, favourable for the sustainable development generated by the European manufacturing industry. (shrink)

Shareholder activists increasingly pressure corporations on social policy issues; yet, extant research provides little understanding of who these activists are and how they choose their corporate targets. In this article, we adopt an activist-centered approach and rely on hybrid organizational identity theory to determine, in a two-phase analysis, how shareholder activists define their economic and social identities and whether these identities are associated with specific target characteristics and tactical strategies. Our findings form the premise of a typology of institutional shareholder (...) activists that is empirically derived and takes into account the wide range of hybrid organizational identities that shareholders exhibit. With a sample of 735 social policy shareholder proposals filed by 104 institutional shareholders in the 2009-2010 period, our study presents one of the first empirical tests examining the heterogeneity of identities within the broad stakeholder category of “social shareholder activists.” Our empirical evidence demonstrates that these shareholders’ mix of economic and social identities is systematically related to their targets’ characteristics and tactical strategies. The implications of our new typology for research on shareholder activism and the value of our findings for managers conclude this article. (shrink)

One of the major roadblocks in conducting Environmental Corporate Social Responsibility (ECSR) research is operationalization of the construct. Existing ECSR measurement tools either require primary data gathering or special subscriptions to proprietary databases that have limited replicability. We address this deficiency by developing a transparent ECSR measure, with an explicit coding scheme, that strictly relies on publicly available data. Our ECSR measure tests favorably for internal consistency and inter-rater reliability, as well as convergent and discriminant validity.

A growing body of work suggests that the presence of women and of independent directors on boards of directors is associated with higher corporate environmental performance. However, the mechanisms linking board composition to corporate environmental performance are not well understood. This study proposes and empirically tests the mediating role of sustainability-themed alliances in the relationship between board composition and corporate environmental performance. Using the population of public oil and gas firms in the United States as the sample, the study relies (...) on renewable energy alliances to measure sustainability-themed alliances and longitudinally analyzes lagged data for independent and control variables. The study found that the higher the representation of women on a firm’s board, the more likely the firm is to form sustainability-themed alliances, and the higher the representation of independent directors on a firm’s board, the more likely the firm is to form sustainability-themed alliances. Such alliances, in turn, positively contribute to corporate environmental performance. This paper discusses the study’s contributions to the board composition-social performance literature. (shrink)

Although the concept of corporate social responsibility is fundamentally multidimensional, most studies use composite scores to assess corporate social performance. How relevant are such composite scores? How the CSR dimensions are weighted? Should the weighting scheme be the same across sectors? This article proposes an original weighting scheme of CSR strengths and concerns, at the sector level, which is proportional to media and nongovernmental organizations scrutiny. The authors show that previous CSP assessments underweight environmental and corporate governance concerns. Moreover, findings (...) suggest that firms that are exposed to the closest scrutiny are usually criticized on one single dimension: for instance, banks for bad corporate governance, and basic-resource firms for environmental damage. Composite scores based on equal weights hence misrepresent CSP and the difference in CSR between sectors. (shrink)

The question of what drives corporate social performance has become a vital concern for many managers and researchers of large corporations. This study addresses this question by adopting a multilevel, multistakeholder, and multimethod approach to theorize and estimate the relative influence of macro, meso, and micro factors on CSP. Applying three different methods of variance decomposition analysis to an international sample of 2060 large public companies over a time span of 5 years, our results show that firm-level factors explain the (...) largest proportion of variance in aggregate CSP as well as CSP oriented toward communities, the natural environment, and employees. These results support our hypotheses according to which CSP is not primarily driven by macrolevel or mesolevel factors, except for shareholder-oriented CSP, which is relatively more influenced by country-level factors. As a whole, our findings also point to the value of subdividing CSP into its stakeholder-specific components as this disaggregation allows for a more careful examination of distinct drivers of distinct aspects of CSP. (shrink)

ABSTRACT:This study examines whether the empirical evidence on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) differs depending on the publication outlet in which that evidence appears. This moderator meta-analysis, based on a total sample size of 33,878 observations, suggests that published CSP-CFP findings have been shaped by differences in institutional logics in different subdisciplines of organization studies. In economics, finance, and accounting journals, the average correlations were only about half the magnitude of the findings published (...) in Social Issues in Management, Business Ethics, or Business and Society journals (mean corrected correlation coefficientof.22 vs..49, respectively). Specifically, economists did not find null or negative CSP-CFP correlations, and average findings published in general management outlets (=.41) were closer to Social Issues in Management, Business Ethics, and Business and Society results than to findings reported in economics, finance, and accounting journals. (shrink)

This paper examines the influence of CEO career horizon problems on corporate social responsibility. We assume that as CEOs are getting older, they tend to disengage in CSR due to their shorter career horizons. We further argue that high levels of industry-level discretion and blockholder ownership amplify the negative effects of CEO age on CSR. Using a panel sample of US-based firms over 2004–2009, we do not find the main effect of CEO age on CSR, but find support for the (...) moderating effects, such that CEO age is negatively associated with CSR when there are high levels of ILD and blockholder ownership. Therefore, results suggest that CEO career horizon problems matter for CSR when CEOs have sufficient discretion over the firm’s strategic decisions and outside blockholders put more pressure on CEOs to engage in financial earning management. (shrink)

This study draws on and extends contingency theory, in relation to stakeholder theory to understand the corporate social performance and financial performance link, by evaluating under what circumstances CSP influences CFP. Contingencies include stakeholder configurations/salience and crisis conditions. Using differentiated measures of CSP, this study examined financial effects of various specific stakeholder facing activities pre- and post-crisis in the food/beverage and pharmaceutical industries, and in firms selling search versus experience goods. The results indicate that pre-crisis CSP is related to post-crisis (...) financial effects, but the relationships are dependent on the interactions among the contingencies studied, so investments in certain social areas improve CFP, whereas others may hurt it. This confirms that a finer grained approach should be taken to the examination of CSP and CFP. On a practical basis, it shows that deep stakeholder knowledge and attention to complementary factors to CSP, such as advertising, must be understood, so CSP activities are of benefit to the firm. (shrink)

The extant literature has examined the effects of ownership structures on corporate social responsibility, yet it has overlooked the non-linear and interactive effects among major shareholder groups. In this study, we examine the non-linear effects of insider and institutional ownerships on CSR. We also examine whether it is necessary to have both incentive alignment and monitoring mechanisms or it is sufficient to have either mechanism to promote CSR. Using a sample of the U.S. Fortune 1000 firms, our results suggest that (...) insider and institutional ownerships have non-linear effects on CSR. We also find support for the complementary mechanisms view, in that the highest CSR rating is observed when both ownership levels are high. Therefore, firms need to maintain strong governance structures to realize synergistic effects in promoting CSR. Our findings provide a more in-depth understanding of the relationships between ownership structures and corporate social outcomes. (shrink)

We study how messages on Twitter by large non-governmental organizations (NGOs), targeting companies from the S&P500, affect these companies’ stock prices. With a sample of 1,611 tweets between 2009 and 2017 by 18 large NGOs, we observe significant changes in the stock prices of the targeted firms. More specifically, NGO tweets stating a positive message about the environmental, social, or governance (ESG). Actions of the firm have a positive effect on stock prices, while negative tweets have a negative effect. Nevertheless, (...) we find that the presence of institutional owners hampers this effect: firms with high institutional ownership value positive tweets more negatively, and negative tweets more positively. These results support the idea that shareholders react significantly to NGO tweets but they react differently depending on their time horizon: for shareholders who have a more short-term horizon, typically institutional owners, the reaction diverges societal expectations about how firms should contribute to society. (shrink)

How does corporate social performance (CSP) affect financial performance as the firm expands internationally? To address this question, I integrate arguments from the International Business (IB) literature and the literature on CSP to propose that the costs and benefits associated with CSP are unevenly distributed across the range of internationalization. Specifically, I argue that the costs of CSP outweigh the benefits at low levels of internationalization, while the benefits outweigh the costs at high levels of internationalization, leading to a moderated, (...) U-shaped relationship. In addition, I disentangle CSP’s effects further by distinguishing between “do-good” CSP and “do-no-harm” CSP, which have been theorized to evoke different stakeholder perceptions and attributions and can thus be expected to harbor different performance effects across the range of internationalization. Analysis of a panel of 1,056 U.S.-based international firms over the period 1995-2012 lends support to these arguments. (shrink)

Existing research on the financial implications of corporate social responsibility (CSR) for firms has predominantly focused on positive aspects of CSR, overlooking that firms also undertake actions and initiatives that qualify as negative CSR. Moreover, studies in this area have not investigated how both positive and negative CSR affect the financial risk of firms. As such, in this research, the authors provide a framework linking both positive and negative CSR to idiosyncratic risk of firms. While investigating these relationships, the authors (...) also analyze the moderating role of financial leverage of firms. Overall, analysis of secondary information for firms from multiple industries over the years 2000–2009 shows that CSR has a significant effect on the idiosyncratic risk of firms, with positive CSR reducing risk and negative CSR increasing it. Results also show that the reduction in risk from positive CSR is not guaranteed, with firms having high levels of financial leverage witnessing lower idiosyncratic risk reduction. (shrink)

Using the behavioral agency model, we analyze how two compensation design characteristics, pay-performance sensitivity and duration of CEO compensation, affect corporate social performance. We find that the performance sensitivity of CEO pay is negatively associated with poor social performance but also negatively affects strong social performance. These results suggest that pay-performance sensitivity increases the relevance of potential negative consequences of poor social performance. However, the ‘insurance’ benefits of strong social performance may also become less relevant. With respect to the duration (...) of CEO compensation, we find that it reduces poor social performance. This finding confirms arguments that a long-term compensation time horizon increases the perceived threat that the negative effects of poor social performance will become visible. With our findings, we integrate behavioral agency theory with the traditional stakeholder views. (shrink)

This article reviews empirical research of corporate social performance using Kinder, Lydenberg, Domini social ratings data through 2011. The review synthesizes 100 empirical studies, noting consistencies and inconsistencies among studies examining similar constructs. Notable consistencies were that, although accounting measures of financial performance were a positive outcome of CSP, the same was not often true of stock returns. Also, demographics of top management teams increased CSP strengths, but did not reduce concerns, whereas organizational decentralization reduced CSP concerns. Notable inconsistencies were (...) that CEO demographics were not as often related to CSP as were TMT demographics, indicating that managerial discretion may be an important mitigating factor shaping managerial effects on CSP. Also, although CSP for some organizations seemed influenced by institutional pressures, other organizations appeared to be less influenced, perhaps suggesting that some organizations are more able than others to resist institutional pressures. Future research should attempt to probe observed consistencies and inconsistencies, and to test the boundaries of observed relationships, toward a disciplined program of middle-range theory development. (shrink)

ABSTRACT:The link between firm corporate social performance (CSP) and executive compensation could be driven by a sorting effect (a firm’s CSP is related to the initial levels of compensation of newly hired executives), or by an incentive effect (incumbent executives are rewarded for past firm CSP). Existing empirical work focuses exclusively on the incentive effect. In contrast, in this paper we explore the sorting effect of firm CSP on the initial compensation of newly hired executives. In doing so, we develop (...) a novel theoretical approach based on an integration of stakeholder theory and human capital theory, suggesting a positive association between the initial compensation of executives and firm CSP strengths and concerns. It also suggests that the strength of this relationship varies between different executive roles (as a function of stakeholder-management responsibilities). We find support for this theoretical framework in a large sample of newly-hired executives employed by Standard & Poor 1500 firms. (shrink)

Grounded in stakeholder theory and a resource-based view of the firm, this longitudinal research demonstrates the evolution of corporate social responsibility (CSR) and firm reputation over time. Drawing on a 5-year sample of 285 major U.S. firms obtained from the KLD database and Fortune’s Most Admired Companies, we find that the proposed dynamic relationship predicts evolving stakeholder expectations to incite organizations to improve their social performance to earn reputational benefits. Contrary to the often labeled stickiness of reputation, we find a (...) “Red Queen” effect that supports reputation as a dynamic construct where the change in CSR does predict a change in corporate reputation. Similarly, we find that the change in reputation over time varies by industry, being most pronounced for manufacturing. From a practical perspective, this relationship across time may incite managers to create sustainable competitive advantage by continuously investing in doing good to reap the benefits of looking good and looking even better with time. (shrink)

Business & Society’s 60th anniversary affords an opportunity to reflect on the journal’s achievements in the context of the wider field. We analyze editorial commentaries to map the evolving mission of the journal, assess the achievement of the journal’s mission through a thematic analysis of published articles, and examine Business & Society’s distinctiveness relative to peer journals using a machine learning approach. Our analysis highlights subtle shifts in Business & Society’s mission and content over time, reflecting variation in the relative (...) emphasis on scholarly quality versus policy/practice relevance, and building the journal and its academic community versus addressing issues of concern to wider society. While Business & Society’s intended missions have been substantially and sequentially achieved, an increased emphasis on the society-business nexus and a critical approach to interdisciplinarity could further enhance Business & Society’s leading role within business and society research and attract new generations of contributors and readers. (shrink)

This study examines the relationship between corporate social responsibility -related information and the value of financial analysts’ stock recommendations. The information environment in which analysts operate in is affected by CSR-related reports that companies voluntarily issue as well as information that becomes available through third-party analysis and rating institutions. We find an inverse relationship between the value of both upgrade and downgrade revisions and the supply of CSR-related information compiled by third-party institutions, suggesting that CSR-related data are associated with a (...) richer information environment that makes it more challenging for analysts to issue informative recommendations, thereby mitigating their contribution to the price discovery process. We further find that the value of analysts’ recommendation revisions is lower for companies that voluntarily issue CSR-related reports compared to those that do not make such disclosures and that the overall effect of CSR on the informativeness of analysts is stronger in the recent years. Our findings have implications for the evolution of CSR reporting as the incorporation of CSR-related information into market prices legitimizes the relevance of such reports. Furthermore, these findings contribute to our understanding of the role and value of information intermediaries in changing information environments. (shrink)

This study examines the association between corporate social responsibility and management forecast accuracy. Using data from 1995 to 2009, we find that firms provide more accurate earnings forecasts in the face of CSR activities. We also find that the positive association between CSR and management forecast accuracy is only present for the post-regulation period of 2001–2009, after the introduction of disclosure regulations intended to mitigate managers’ opportunistic behavior. These findings are consistent with the notion that managers strive to improve the (...) quality of financial disclosure following superior CSR performance in the recent period. (shrink)

Using U.S. Department of Justice data on state-level political corruption, we find that, consistent with the Harmful Corruption Environment Hypothesis (HCEH), firms situated in states with higher levels of corruption incur higher costs of equity (CoEs). These results are robust for additional controls, propensity score matching, use of instrumental variables, exogenous shocks, and alternate measures for main dependent and primary independent research variables. Our study extends the stream of literature that investigates the influence of local ethical or trust factors on (...) CoE and complements works by El Ghoul and colleagues and Gupta and colleagues. (shrink)

This study investigates whether and how the corporate social responsibility (CSR) profile of a company transfers to another company when an executive leaves a firm. We integrate upper echelon and institutional theories, and develop a novel measure of CSR profiles to explore this issue with a longitudinal data set of executive migrations over a 14-year period. We find that migrated executives assimilate elements of their old firms’ CSR profiles into their new firms (i.e., narrowing the distance between the two firms’ (...) CSR profiles), and this is true for both CSR and corporate social irresponsibility (CSiR). This relationship is stronger when the migrating executive comes from a bigger firm with better social and financial performance than that of the new firm. We also find that the potential for improvement in CSR profiles in migration holds true for CSiR, but not CSR. Our findings have import for upper echelon theory and the managerial discretion afforded to executives regarding CSR decisions. (shrink)

The authors explore the relation between the way different family firms are named, and the shareholder value impact of these firms’ new product introductions. Using an event study of 1,294 product introduction announcements of 107 publicly listed U.S. family firms, the authors find that the presence of the founding family’s name as part of a family firm’s name acts as a valuable firm resource, increasing the abnormal stock returns surrounding the firm’s new product introductions. Superior returns to family-named firms’ new (...) product introductions are partially mediated by these firms’ history of ethical product-related behavior: family-named firms, particularly those with corporate branding, and those wherein a founding family member holds the CEO or chairman position, are more likely to exhibit a history of avoiding such product-related controversies as product safety issues, and deceptive advertising. The authors highlight the managerial and theoretical contributions of this research. (shrink)