Peer Effects of Corporate Social Responsibility

By Jie Cao, Hao Liang, Xintong Zhan. Management Sciences, 2019

495 citations recorded by the source corpus.

We investigate how firms react to their peers’ commitment to corporate social responsibility (CSR), using a regression discontinuity design that relies on the passing or failing of CSR proposals by a small margin of votes during shareholder meetings. We find the passage of a close-call CSR proposal is followed by the adoption of similar CSR practices by peer firms, especially those with similar products and followed by more financial analysts. Stock returns around the voting dates are lower for peers with higher financial constraints in a competing relationship, but higher for peers in an alliance partnership with the voting firm.

Subfields: Marketing, Organizational Behavior and Human Resource Management, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/10e86da90756b1309281f8d1f4abdd91da28ea9d

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Citations in the corpus

Mandatory CSR and sustainability reporting: economic analysis and literature review (2019, background): “…monitoring and governance of firms’ CSR activities; (ii) a stronger link between CSR and economic performance; (iii) strengthened market and societal pressure due to newly available CSR information; and (iv) learning about or benchmarking against peer firms’ CSR practices (e.g., Cao et al. 2019).”
ESG Ratings and Stock Performance during the COVID-19 Crisis (2021, background): “In this respect, several studies have highlighted a positive relationship between a firm’s CSR performance and its financial performance [1,2,22,26,34,35].”
An Efficiency Perspective on Carbon Emissions and Financial Performance (2020, background): “Disclosure by peer firms relates to a focal firm's disclosure decision through peer effects (Cao et al., 2019; Cheng et al., 2014) but is theoretically unlikely to influence financial performance outcomes.”
Corporate social responsibility in emerging market economies: Determinants, consequences, and future research directions (2020, background): “Cao et al. (2019) examine the role of multiple large shareholders on CSR using a sample of Chinese-listed firms.”