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Journal ArticleDOI

Value-Enhancing Capabilities of CSR: A Brief Review of Contemporary Literature

TL;DR: This article reviewed and synthesized contemporary business literature that focuses on the role of Corporate Social Responsibility (CSR) to enhance firm value and identified gaps in existing literature, evaluates inconsistent findings, discusses possible data sources for empirical researchers, and provides direction for exploring other promising avenues in future studies.
Abstract: This study reviews and synthesizes contemporary business literature that focuses on the role of Corporate Social Responsibility (CSR) to enhance firm value. The main objective of this review is to proffer a precise understanding of what has already been investigated and the findings of those investigations regarding the value-enhancing capabilities of CSR. In addition, this review identifies gaps in existing literature, evaluates inconsistent findings, discusses possible data sources for empirical researchers, and provides direction for exploring other promising avenues in future studies. The thrust of the CSR literature largely acknowledges the value-enhancing capabilities of firms’ social and environmental activities. However, the predominance of inconsistent theoretical grounds in major CSR-benefits-related areas suggests that there is ample room for future research to contribute to extant literature. Anecdotal evidence, the prevalence of theoretical arguments, and the availability of large cross-sectional firm-level data suggest that future research will enrich the literature by investigating the real insights behind several unanswered questions, by establishing implicit understandings regarding recognized findings, and by developing new theories in this emerging field.
Citations
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Journal ArticleDOI
TL;DR: This paper investigated the effect of environmental, social, and governance (ESG) activities and their disclosure on firm value, and found that ESG strengths increase firm value and weaknesses decrease it, while disclosure plays a crucial moderating role by mitigating the negative effect of weaknesses and attenuating the positive effect of strengths.

426 citations

Journal ArticleDOI
TL;DR: The authors survey the literature on environmental, social and governance disclosures and performance and their effects on firm value and highlight stylised observations coming from the most recent work that has not yet become part of the ‘conventional wisdom' in the field.
Abstract: This paper not only attempts to survey the burgeoning literature on environmental, social and governance disclosures and performance and their effects on firm value, but its focus also lies on highlighting stylised observations coming from the most recent work that has not yet become part of the ‘conventional wisdom’ in the field. In addition, it outlines some of the crucial knowledge gaps and interesting questions that have not, as of yet, been addressed and thus outlines a potential agenda for future research on socially responsible investing. Lastly, it introduces the papers published in this special issue of the British Accounting Review.

350 citations


Cites background from "Value-Enhancing Capabilities of CSR..."

  • ...3 only been strengthened over the years (Malik, 2015)....

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  • ...Both previous literature reviews (Malik, 2015; Margolis and Walsh, 2003) and meta-analyses (Friede, Busch, and Bassen, 2015; Lu and Taylor, 2016; Margolis et al., 2009; Orlitzky et al., 2003) document that the majority of studies in this field bring forward evidence of this positive link, with a…...

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  • ...Both previous literature reviews (Malik, 2015; Margolis and Walsh, 2003) and meta-analyses (Friede, Busch, and Bassen, 2015; Lu and Taylor, 2016; Margolis et al....

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Journal ArticleDOI
TL;DR: The authors systematically reviewed 494 articles in 31 journals over a 31-year period and found that international CSR research is far from being global and still emerging in ‘mainstream’ management/business.

245 citations

Journal ArticleDOI
01 Oct 2017
TL;DR: A literature review as mentioned in this paper evaluates 44 empirical studies on IR which were published especially after the adoption of the IR framework by the International Integrated Reporting Council (IIRC) in December 2013.
Abstract: In view of the increased demand for non-financial reporting after the financial crisis of 2008/2009, integrated reporting (IR) plays a key role in management control and stakeholder relations management. As a consequence of “integrated thinking” IR combines traditional financial accounting with sustainability and corporate governance related issues to enhance the decision usefulness of modern business reporting. Although there has been steady growth in the awareness of IR research (Eccles et al. J Appl Corp Finance 27:8–17, 2015), the current state of empirical IR research activities is not well described so far. This literature review evaluates 44 empirical studies on IR which were published especially after the adoption of the IR framework by the International Integrated Reporting Council (IIRC) in December 2013. We will briefly introduce the IR research agenda, which provides a clear structure for the analysis of current empirical research activities in this field. For the market, organization and individual/group decision level, we show which factors contribute to IR implementation and IR quality. Furthermore, empirical research focuses on market reactions to IR. We also stress the limitations of the studies and provide useful recommendation for future IR research activities for each level of analysis.

205 citations

Journal ArticleDOI
TL;DR: This paper investigated the role of family involvement in the relationship between corporate social responsibility reporting and firm market value using a longitudinal archival data set in the French context and found that family firms report less information on their CSR duties than do non-family firms.

193 citations

References
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Book ChapterDOI
01 Jan 2007
TL;DR: When I hear businessmen speak eloquently about the social responsibilities of business in a free-enterprise system, I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life as mentioned in this paper.
Abstract: When I hear businessmen speak eloquently about the “social responsibilities of business in a free-enterprise system”, I am reminded of the wonderful line about the Frenchman who discovered at the age of 70 that he had been speaking prose all his life. The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are — or would be if they or anyone else took them seriously -preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.

9,875 citations


"Value-Enhancing Capabilities of CSR..." refers background in this paper

  • ...Though some scholars have argued that there is a negative association or no clear association at all between CSR and a firm’s financial performance (Friedman, 1970; Griffin & Mahon, 1997; Waddock & Graves, 1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research…...

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  • ...Though some scholars have argued that there is a negative association or no clear association at all between CSR and a firm’s financial performance (Friedman, 1970; Griffin & Mahon, 1997; Waddock & Graves, 1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research demonstrates that CSR and firm performance are positively associated (Porter & Kramer, 2002; Saiia et al....

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  • ...In recent years, significant numbers of companies, regardless of their size and ownership structure, are investing millions of dollars in CSR activities, and these firms are proclaiming their CSR credentials by producing stand-alone CSR reports (KPMG 2011). 2 If CSR activities have a negative impact or no impact at all on firm value, then managers would not be interested in investing in and reporting upon their socially responsible actions in such a vigorous manner. Since CSR investments and CSR reporting are increasing, these trends imply that managers are encouraged to pursue CSR activities due to their positive effects on firms. While analyzing the demand side of CSR disclosures, Buzby & Falk (1978) found that the majority of mutual funds use CSR information when formulating their investment policies....

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  • ...Though some scholars have argued that there is a negative association or no clear association at all between CSR and a firm’s financial performance (Friedman, 1970; Griffin & Mahon, 1997; Waddock & Graves, 1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research demonstrates that CSR and firm performance are positively associated (Porter & Kramer, 2002; Saiia et al., 2003; Brammer & Millington, 2005; Godfrey, 2005; Orlitzky et al., 2003; Roman et al., 1999, etc.). Researchers have clearly documented that socially responsible firms outperform less socially responsible firms in terms of various accounting measures including return on investment (ROI), return on assets (ROA), and return on sales (ROS) (Cochran & Wood, 1984; Nehrt, 1996; Porter & van der Linde, 1995). In a recent commentary, Moser and Martin (2012) discussed a comprehensive meta-analysis of 251 studies that examined the association between CSR and firm performance....

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  • ...Though some scholars have argued that there is a negative association or no clear association at all between CSR and a firm’s financial performance (Friedman, 1970; Griffin & Mahon, 1997; Waddock & Graves, 1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research demonstrates that CSR and firm performance are positively associated (Porter & Kramer, 2002; Saiia et al., 2003; Brammer & Millington, 2005; Godfrey, 2005; Orlitzky et al., 2003; Roman et al., 1999, etc.). Researchers have clearly documented that socially responsible firms outperform less socially responsible firms in terms of various accounting measures including return on investment (ROI), return on assets (ROA), and return on sales (ROS) (Cochran & Wood, 1984; Nehrt, 1996; Porter & van der Linde, 1995). In a recent commentary, Moser and Martin (2012) discussed a comprehensive meta-analysis of 251 studies that examined the association between CSR and firm performance. In that meta-analysis, the authors Margolis et al. (2009) concluded that the overall association between CSR and firm performance is positive....

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Journal ArticleDOI
TL;DR: This article conducted a meta-analysis of 52 studies and found that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association.
Abstract: Most theorizing on the relationship between corporate social/environmental performance (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. With this integrative, quantitative study, we intend to show that the mainstream claim that we have little generalizable knowledge about CSP and CFP is built on shaky grounds. Providing a methodologically more rigorous review than previous efforts, we conduct a meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations. The meta-analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association. For example, CSP appears to be more highly correlated with accounting-based measures of CFP than with market-based ...

6,493 citations


"Value-Enhancing Capabilities of CSR..." refers result in this paper

  • ...…1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research demonstrates that CSR and firm performance are positively associated (Porter & Kramer, 2002; Saiia et al., 2003; Brammer & Millington, 2005; Godfrey, 2005; Orlitzky et al., 2003; Roman et al., 1999, etc.)....

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Journal ArticleDOI
TL;DR: In this paper, the effect of differences in dividend policy on the current price of shares in an ideal economy characterized by perfect capital markets, rational behavior, and perfect certainty is examined.
Abstract: In the hope that it may help to overcome these obstacles to effective empirical testing, this paper will attempt to fill the existing gap in the theoretical literature on valuation. We shall begin, in Section I , by examining the effects the effects of differences in dividend policy on the current price of shares in an ideal economy characterized by perfect capital markets, rational behavior, and perfect certainty. Still within this convenient analytical framework we shall go on in Section II and III to consider certain closely related issues that appear to have been responsible for considerable misunderstanding of the role of dividend policy. In particular, Section II will focus on the longstanding debate about what investors "really" capitalize when they buy shares; and Section III on the much mooted relations between price, the rate of growth of profits, and the rate of dividends per share. Once these fundamentals have been established, we shall proceed in Section IV to drop the assumption of certainty and to see the extent to which the earlier conclusions about dividend policy must be modified. Finally, in Section V , we shall briefly examine the implications for the dividend policy problem of certain kinds of market imperfections.

6,265 citations


"Value-Enhancing Capabilities of CSR..." refers background in this paper

  • ...Finance researchers have widely measured the value of the equity by discounting the future cash flows, based on Miller and Modigliani’s (1961) arguments....

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Journal ArticleDOI
TL;DR: In this article, the authors report the results of a rigorous study of the empirical linkages between financial and social performance, finding that corporate social performance (CSP) is positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related.
Abstract: Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.? 1997 by John Wiley & Sons, Ltd

5,922 citations


"Value-Enhancing Capabilities of CSR..." refers background in this paper

  • ...…there is a negative association or no clear association at all between CSR and a firm’s financial performance (Friedman, 1970; Griffin & Mahon, 1997; Waddock & Graves, 1997; Harrison & Freeman, 1999; McWilliams & Siegel, 2000), the majority of prior research demonstrates that CSR and firm…...

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  • ...So, as previously mentioned, superior quality CSR performance positively affects the value of the firm, not only in the short term, but also in the long run (McGuire et al., 1988; Waddock & Graves, 1997; Luo & Bhattacharya, 2009; Eccles et al., 2013)....

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Journal ArticleDOI
TL;DR: In this article, the authors trace the evolution of the concept and definition of corporate social responsibility (CSR) and present an interesting history associated with the evolution and evolution of CSR.
Abstract: There is an impressive history associated with the evolution of the concept and definition of corporate social responsibility (CSR). In this article, the author traces the evolution of the CSR cons...

5,403 citations


"Value-Enhancing Capabilities of CSR..." refers background in this paper

  • ...Carroll (1999) discusses the ambiguity and evolution of the definition of CSR: “The term [social responsibility] is a brilliant one; it means something, but not always the same thing, to everybody....

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  • ...The other group of researchers defines CSR 7 as a company’s discretionary multidimensional activities, which include social, political, environmental, economic and ethical actions (Carroll, 1999; Devinney, 2009)....

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