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| Author: | Godfrey, P.C. Merrill, C.B. Hansen, J.M. |
| Title: | The relationship between corporate social responsibility and shareholder value: An empirical test of the risk management hypothesis |
| Journal: | Strategic Management Journal
2009 : APR, VOL. 30:4, p. 425-445 |
| Index terms: | corporate responsibility social responsibility shareholder value business ethics risk management companies models theories |
| Freeterms: | CSR |
| Language: | eng |
| Abstract: | It is questioned if shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR). There is a theoretical model linking such activities to shareholder value when a firm suffers a negative event. Key portions of this theory of the 'insurance-like' property of CSR activity are tested. Such activity is argued to lead to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms due to this goodwill. The risk management model is extended by theorizing that some types of CSR activities will be more likely to create goodwill and offer 'insurance-like' protection than other types. Defined are several firm and event specific characteristics expected to influence the link btw. CSR activities and an insurance effect. The model is tested using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993 to 2003. It is found that participation in institutional CSR activities provides an 'insurance-like' benefit, while participation in technical CSRs yields no such benefits. |
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