Board interlocks, career prospects and corporate social responsibility

Abstract

This paper investigates how director career concerns affect the relation between board interlocks and corporate social responsibility (CSR). We first document that firms with central or well‐connected boards of directors tend to invest more in CSR. We then show that the positive relation between board connectedness and CSR is significantly more pronounced for firms whose directors' future careers would benefit more from CSR, such as those with better corporate governance, firms with larger investments in research and development or firms with high product market threats. Our findings suggest that director career concerns play an important role in the board of directors' decision on CSR investments.