The influence of corporate social responsibility on investment efficiency and innovation

By Kirsten A. Cook, Andrea M. Romi, D. Sánchez, J. M. Sanchez. Journal of Business Finance & Accounting, 2019

231 citations recorded by the source corpus.

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 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. Causal 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 theories (Jensen 2001 and Porter and Kramer 2011).

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/bf6d2ea7332f0bb03943c65903821c71434398c3