Corporate social responsibility versus corporate shareholder responsibility: A family firm perspective

By A. Abeysekera, Chitru S. Fernando. Journal of Corporate Finance, 2020

170 citations recorded by the source corpus.

Recent literature suggests that some socially responsible corporate actions benefit shareholders while others do not. We study differences in policy toward corporate social responsibility (CSR) between family and non-family firms, using environmental performance as the proxy for CSR. We show that family firms are more responsible to shareholders than non-family firms in making environmental investments. When shareholder interests and societal interests coincide, i.e., when it comes to alleviating environmental concerns that have potential to harm society and elevate the firm's risk exposure, family firms do at least as well as non-family firms in protecting shareholder interests. However, when shareholder and societal interests diverge, i.e., when it comes to making environmental investments that might benefit society but do not benefit shareholders, family firms protect shareholder interests by undertaking a significantly lower level of such investments than non-family firms. Our findings suggest that lack of diversification by controlling families creates strong incentives for them to act in the financial interest of all shareholders, which more than overcomes any noneconomic benefits families may derive from engaging in social causes that do not benefit non-controlling shareholders.

Subfields: Accounting, Management of Technology and Innovation, Organizational Behavior and Human Resource Management

View Paper: https://www.semanticscholar.org/paper/7e7527828f05d5eeb491fdffefa1242930812e4e

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In Accounting

1. Andrew Koch
2. Stuart L. Gillan
3. Laura T. Starks
4. Pedro Matos
5. Miguel A. Ferreira
6. F. Ferri
7. Audra L. Boone
8. Joshua T. White

In Management of Technology and Innovation

1. Stuart L. Gillan
2. Laura T. Starks
3. Andrew Koch

In Organizational Behavior and Human Resource Management

1. Stuart L. Gillan
2. Laura T. Starks
3. Andrew Koch
4. Pedro Matos
5. Miguel A. Ferreira

Citations in the corpus

• Firms and social responsibility: A review of ESG and CSR research in corporate finance (2021, methodology): “In consideration of the agency issues involved in ESG/CSR choices and whether these choices benefit shareholders, Abeysekera and Fernando (2018) hypothesize that family firms and non-family firms differ in their agency issues regarding ESG/CSR.”