Publication Type

Journal Article

Version

Postprint

Publication Date

12-2016

Abstract

In the corporate finance tradition, starting with Berle and Means (1932), corporations should generally be run to maximize shareholder value. The agency view of corporate social responsibility (CSR) considers CSR an agency problem and a waste of corporate resources. Given our identification strategy by means of an instrumental variable approach, we find that well-governed firms that 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 that a positive relation exists between CSR and value and that CSR attenuates the negative relation between managerial entrenchment and value.

Keywords

Corporate social responsibility, Agency costs, Corporate governance

Discipline

Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Finance

Publication

Journal of Financial Economics

Volume

122

Issue

3

First Page

585

Last Page

606

ISSN

0304-405X

Identifier

10.1016/j.jfineco.2015.12.003

Publisher

Elsevier

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1016/j.jfineco.2015.12.003

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