scholarly journals Which Corporate Social Responsibility Performance Affects the Cost of Equity? Evidence from Korea

2019 ◽  
Vol 11 (10) ◽  
pp. 2947 ◽  
Author(s):  
Youngkyung Ok ◽  
Jungmu Kim
Keyword(s):  
Environmental Management ◽  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Firm Value ◽  
Cost Of Equity ◽  
Socially Responsible ◽  
Responsible Management ◽  
Corporate Social ◽  
The Cost

This study analyzes the effect of corporate social responsibility activities on the cost of equity in Korea. We find that firms with better corporate social responsibility (CSR) performance generally exhibit cheaper equity financing. Considering three dimensions of CSR separately, we find that a higher “socially responsible management” significantly reduces the cost of equity by 1.13%-1.37% per annum and “Corporate governance” activity also marginally affects the cost of equity, while “environmental management” has no impact. Our result is robust in controlling for systematic risk, size, leverage ratio, and the number of analysts. These results imply that enhancing socially responsible management and corporate governance can increase firm value in Korea, but environmental management is not relevant for firm values. Putting differently, investors tolerate a lower return from firms with more CSR activities, because they expect them to provide sustainable incomes. Future researches can extend our approach to examining the effect on the cost of debt and cost of capital.

scholarly journals Corporate Governance and Firm Value: The Impact of Chinese Companies` Corporate Social Responsibility

2017 ◽  
Vol 32 (2) ◽  
pp. 23-61
Author(s):  
Kim Dong Soon ◽  
Yeo Eunjung ◽  
Zhang Ying-ai
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Firm Value ◽  
Good Governance ◽  
Positive Impact ◽  
Socially Responsible ◽  
Chinese Companies ◽  
Corporate Social ◽  
The Impact

We investigate whether the corporate social responsibility (CSR) of Chinese companies has a certain impact on firm value, and further, depending on the level of corporate governance, how the impact of CSR on firm value changes. First, CSR activities generate a positive effect on firm value suggesting that companies may have an incentive to be willing and to continue to perform their CSR activities. Second, if the ratio of the largest shareholder`s stake is low (high) or the gap between the largest and the second-largest shareholder`s stakes is small (large), CSR activities lead to a significant positive (negative) impact on firm value. Third, we find a positive impact for firms with high management or auditor ownership and for firms whose CEO and chairman of the board are not the same person. Interestingly, due to the fact that significant numbers of outside directors of Chinese companies are appointed by the largest shareholders in China, CSR activity may be used to better align the company with the private interests of the largest shareholders than with the interests of other shareholders, thus lowering firm value. Lastly, if the company`s largest shareholder is the country government, CSR has a positive impact on firm value. In this case, the largest shareholder―the country government―carries out CSR activities for social benefit because such a benefit is naturally aligned with the country`s interests in the company. This paper also sheds light on Chinese companies` corporate governance structure that enhances socially responsible activities and firm value. Our results suggest that good governance provides incentives to voluntarily and continuously perform socially responsible activities.

scholarly journals Does CSR Activity Amount to Socially Responsible Management?

2021 ◽  
Author(s):  
M. John Foster
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Local Community ◽  
Annual Reports ◽  
Socially Responsible ◽  
Responsible Management ◽  
Exploratory Investigation ◽  
Research Questions ◽  
The Uk ◽  
Corporate Social

AbstractIn essence firms or companies are usually thought to exist to make products for or provide services of some sort to third parties, other companies or individuals. The philosophical question which naturally arises then is ‘to the benefit of whom should a firm’s activities be aimed?’ Possible answers include the owners of the firm, the firm’s employees or wider society, the firm’s local community or their host nation. It is because of firms’ location within a wider society that the issue of corporate social responsibility arises. The issue is do they contribute in a positive way to the fabric of society. In this paper we conduct an exploratory investigation whose research questions, broadly, are whether there is public evidence of corporate social responsibility activity by firms listed in the UK and to what extent, if any, such activities may amount to genuinely socially responsible management by the firms. We examined the most up to date annual reports of a split sample of 36 firms listed in the FTSE 350. The short answers to the two research questions above are: to some degree and no by some margin, based on data from the sample firms.

scholarly journals Corporate Social Responsibility Proposals and Firm Valuation

2021 ◽  
Vol 9 (3) ◽  
pp. 45
Author(s):  
Pyung Kun Chu
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Firm Value ◽  
Causal Effect ◽  
Firm Valuation ◽  
Public Companies ◽  
Shareholder Proposals ◽  
The Board Of Directors ◽  
Corporate Social

Corporate social responsibility (CSR) is a topic which has recently been attracting an increasing amount of attention with respect to corporate operations, and shareholder proposals on CSR are also one of the main types of proposals at firms’ annual shareholder meetings. However, even though the frequency of CSR proposals at annual meetings is comparable to other types of shareholder proposals, the approval rate of CSR proposals is significantly lower than that of other types of proposals, meaning that most CSR proposals are not recommended by the annual meeting to the board of directors for further approval. Motivated by this stylized fact, this study investigates the value of the submission of CSR shareholder proposals. Using a regression discontinuity design with shareholder proposal data of US public companies between 2006 and 2019, this study examines the importance of shareholders’ interest in CSR for firm valuation. Interestingly, while the CSR proposals themselves are typically not approved, the submission of CSR proposals by shareholders at annual meetings matters for the value impact of other types of shareholder proposals. More specifically, the causal effect of approving a corporate governance proposal on shareholder value is significantly positive only if the corporate governance proposal is voted together with a CSR proposal at the same meeting, i.e., the presence of CSR proposals is important for firm value through its interrelations with corporate governance proposals. This shows that the submission of CSR shareholder proposals has significant value implications, even if the CSR proposals themselves are not approved at annual meetings.

Corporate governance and corporate social responsibility interface: a case study of private equity

2020 ◽  
Vol 20 (4) ◽  
pp. 703-717 ◽  
Author(s):  
Virgo Süsi ◽  
Krista Jaakson
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Firm Value ◽  
Private Equity ◽  
Resource Dependence Theory ◽  
Medium Size ◽  
Content Type ◽  
Corporate Social

Purpose This paper aims to explore why private equity (PE) cares about corporate social responsibility (CSR) of its investees given their relatively short investment time-horizon and how it designs corporate governance (CG) bundle to achieve both financial and CSR goals of the private firms it invests in. Design/methodology/approach Case study design is applied to get deeper insights on the why and how questions posed. Analysis is based on triangulation of secondary data and in-depth interviews with both PE and their investee firms. Findings The authors find that long-term sustainability supported by CSR increases firm value. They also outline specific CG bundle that the PE uses to achieve both its financial and CSR goals. CG mechanisms appeared to reflect agency theory, but even more resource dependence theory. Practical implications The outlined CG bundle could be used as a template for all types of private firm owners to improve both financial and CSR performance of the firm. Originality/value The paper adds to fragmented area of CG and CSR interface. The authors specifically focus on several under-researched contexts of this interface: private small and medium size firms (SMEs), emerging markets and PE investors.

CSR and Its Development in Poland

2011 ◽  
Vol 21 (3) ◽  
pp. 59-72
Author(s):  
Marzena Syper-Jędrzejak
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Competitive Advantage ◽  
Social Marketing ◽  
Socially Responsible ◽  
Csr Strategy ◽  
Corporate Social ◽  
Global World

Regulations on corporate social responsibility, are instruments that fill the space between the codes of law and tradition, and morality. In this way the ethics of the company builds customer confidence, investor interest and pride in employees. Business activities in a global world result in many threats associated with loss of reputation of the company, exposure to the accusation of unethical actions. In this situation, conducting a long-term CSR strategy can become a tool for prevention and building competitive advantage. Among the tools used by organizations, to build socially responsible business the most popular are: eco-labelling, social marketing programs, including the ethics programs for staff and corporate governance. It should be noted that a huge responsibility for the effectiveness of programs and tools for CSR rests with the managers.

Corporate investment in social responsibility versus dividends?

2012 ◽  
Vol 8 (2) ◽  
pp. 199-207 ◽  
Author(s):  
Michel T.J. Rakotomavo
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Design Methodology ◽  
Corporate Investment ◽  
Cash Flows ◽  
Cost Of Equity ◽  
Content Type ◽  
Corporate Social ◽  
The Cost ◽  
Practical Implications

PurposeThe paper aims to examine whether corporate investment in social responsibility takes away from expected dividends.Design/methodology/approachThe article builds two hypotheses that are tested empirically through the analysis of 17,670 US firm‐year observations covering the period 1991‐2007. The tests are conducted in both univariate and multivariate settings.FindingsThe evidence supports the hypothesis that mature firms tend to invest more in corporate social responsibility (CSR). Specifically, firms investing highly in CSR tend to be larger, more profitable, and with greater earned (rather than contributed) equity. The evidence also supports the hypothesis that CSR investment does not subtract from dividends. Instead, CSR effort and dividend tend to increase together. Thus, CSR investment tends to be effected by companies who can afford it, and it does not lower value by lowering investors' expected payout.Practical implicationsThese results imply that spending resources on CSR does not lower the cash flows paid out to investors. When combined with the finding that CSR lowers the cost of equity, they also mean that CSR increases the value of a company's stock.Originality/valueThis is the first study that explicitly links CSR to the dividend flow.

scholarly journals The roles of cost of capital, corporate governance, and corporate social responsibility in improving firm value: evidence from Indonesia

2019 ◽  
Vol 16 (4) ◽  
pp. 28-36 ◽  
Author(s):  
Kartika Hendra Titisari ◽  
M. Moeljadi ◽  
Kusuma Ratnawati ◽  
Nur Khusniyah Indrawati
Keyword(s):  
Corporate Governance ◽  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Firm Value ◽  
Cost Of Capital ◽  
Corporate Sustainability ◽  
Corporate Image ◽  
Negative Effect ◽  
Corporate Social ◽  
The Impact

Corporate governance (CG) and corporate social responsibility (CSR) are important subjects for corporate sustainability that affect firm value (FV). At the same time research results in several countries provide diverse empirical evidence. This study analyzes the impact of corporate governance (CG) and corporate social responsibility (CSR) on firm value (FV) through the cost of capital (CoC) in public companies of Indonesia. The research sample includes 27 companies that publish sustainability reports and corporate governance reports, with an observation period from 2010 till 2016. This study presents the analysis of three firm value proxies (Tobin’s q (TQ), Price Earnings Ratio (PER), and Price to Book Value (PBV)). Results of hypotheses testing using Partial Least Squares (PLS) show that CG and CSR have both direct and indirect effects on FV. These findings are consistent for all three firm value assessments. According to direct testing, CG has a negative effect on FV, while CSR has a positive effect. The CoC acts as a mediating variable in this relationship. The CG and CSR have a negative effect on CoC, while CoC has a negative effect on FV. The findings show that CG and CSR can improve the company performance and corporate image internally and externally, thereby increasing the investors` confidence, and companies have the opportunity to obtain inexpensive funding sources that can reduce CoC. A decrease in CoC can increase profitability and have an impact on FV increasing.

Sign in / Sign up

Export Citation Format

Share Document