In the corporate finance tradition starting with Berle & Means (1923), corporations should generally be run so as to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR as an agency problem and a waste of corporate resources. Given our identification strategy by means of an IV approach, we find that well-governed firms who suffer less from agency concerns (less cash abundance, positive pay-for-performance, small control wedge, strong minority protection) engage more in CSR. We also find a positive relation between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.
corporate social responsibility, agency problems, value enhancement, corporate governance
Business Law, Public Responsibility, and Ethics | Corporate Finance
European Corporate Governance Institute, Finance Working Paper No. 432/2014
City or Country
FERRELL, Allen; Hao LIANG; and RENNEBOOG, Luc.
Socially responsible firms. (2016). 1-69. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4962