On the Foundations of Corporate Social Responsibility

Abstract

Using corporate social responsibility (CSR) ratings for 23,000 companies from 114 countries, we find that a firm's CSR rating and its country's legal origin are strongly correlated. Legal origin is a stronger explanation than "doing good by doing well" factors or firm and country characteristics (ownership concentration, political institutions, and globalization): firms from common law countries have lower CSR than companies from civil law countries, with Scandinavian civil law firms having the highest CSR ratings. Evidence from quasi-natural experiments such as scandals and natural disasters suggests that civil law firms are more responsive to CSR shocks than common law firms.THE CLASSICAL VIEW IN FINANCE on modern corporations takes a shareholder value maximization perspective, which holds that corporations are accountable only to profit-maximizing shareholders, and apart from their contractually determined obligations, have no responsibility to serve other stakeholders' interests or to enhance society's welfare (Friedman (1970), Bénabou and Tirole (2010)). In reality, however, corporations often focus on objectives beyond profit maximization and participate in activities that improve other * Hao Liang is from Singapore Management University. Luc Renneboog is from Tilburg University. We acknowledge that we are aware of the Journal of Finance's submission guidelines and policies and conflict of interest disclosure policy and that there are no conflicts of interest that exist for this paper. We are very grateful to Andrei Shleifer and Holger Spamann for comments and suggestions on early versions of the paper. We also wish to thank

Corporate Donations and Shareholder Value

“…Thus, as summarized by Gautier and Pache (2015), corporate philanthropy concerns voluntary donations of corporate resources to charitable causes. As corporate philanthropy consists of pro-social behavior, it is considered as part of corporate social responsibility (CSR) that involves explicit pro-social spending (Shapira, 2012;Liang and Renneboog, 2016). We can partition donations on the basis of the type of beneficiary: charitable and political donations, but can also dissect total charitable donations on the basis of the type of payment:…”

Do income taxes affect corporate social responsibility? Evidence from European‐listed companies

“…The advantage of this approach is that it allows for cross-country comparisons of the effect of taxes on the incentive to invest (Spengel, Dieter, Finke, & Heckemeyer, 2018). ESG score components from Thomson Reuters' ASSET4, as a proxy of the level of CSR (see, e.g., Liang & Renneboog, 2017, Arouri, Gomes, & Pukthuanthong, 2019. The CSR score used in our sample is a weighted average of ESG scores ranged from 0 to 100 (highest CSR level).…”

“…showing that our results hold also without the use of IVs (Table 5) 4 | RESULTS Table 3) the ability of firms to develop "sustainable products", respect "human rights", the "local community," and the "workforce" involved in the value creation processes. An increase of one standard deviation of EATRs discourages the "emission" reduction, the "resource use" valorization, and "environmental innovation" by 1.41 % and 2.9% (Table 3) (Liang & Renneboog, 2017;Boubakri, Guedhami, Kwok, & Wang, 2019;Sun & Gunia, 2018).…”

The Relationship between Public Listing, Context, Multi-Nationality and Internal CSR

“…Becchetti et al (2013) suggest that it is firms in common law countries that tend to do better in terms of community involvement, which might suggest reputation is taken seriously (c.f. Liang and Renneboog, 2017;Gjølberg, 2009). Impelled by legitimacy concerns, but pulled by short-term pressures to maximize profits, firms operating in such jurisdictions would be less likely to have a CSR statement that formally commits them for a sustained period of time (Matten and Moon, 2008).…”