Assessing whether corporate social responsibility influence corporate value

ABSTRACT

This study used the corporate social responsibility (CSR) index to gauge the corporate value and social responsibility performance of corporations in Taiwan. We investigated whether CSR influences corporate value and whether the extent of that influence varies with corporate value or time. The results indicate that the influence of CSR on corporate value does not change with time. CSR exerts a positive influence on company value, and this influence does not change over time. However, the extent of the influence significantly varies with corporate value. When the corporate value of a company is not high, investing in CSR would only increase costs and fail to effectively increase corporate value. In contrast, if the corporate value of the company is high, investments in CSR in this circumstance would instead promote the effective increase of corporate value.

KEYWORDS:

• Corporate social responsibility
• CSR
• social responsibility performance
• corporate social responsibility index
• corporate value

JEL CLASSIFICATION:

• G32
• L25
• M14

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ We adopted the top 27% and the bottom 27% as the grouping standards based on Kelley (1939) and Cureton (1957).

² Stakeholders are referred to the organization or individual within a structure that will affect the structure’s goals or be affected by the structure. Firm administrators must formulate various sustainability strategies that can be employed separately to meet the differing needs of individual stakeholders. Generally speaking, stakeholders include owners of the company, governmental bodies, political groups, trade associations, trade unions, communities, financiers, suppliers, employees, and customers, and all individuals and organizations that are connected to the firm (Donaldson and Preston 1995). The firm has a binding fiduciary duty to put the needs of the stakeholders first. It might be best to think of firm stakeholders as a series of concentric circles, the core of which being the owner of the firm, with proliferating multifold layers containing other stakeholders.

Additional information

Funding

The authors gratefully acknowledge the financial support of the Ministry of Science and Technology (MOST 104-2410-H-327-008). Roger C. Y. Chen is Professor of Department of Logistics Management, National Kaohsiung First University of Science and Technology. He holds a Ph.D. and MS in Finance from University of Texas at Dallas. His research interests include IPO, M&A, insider trading, corporate governance and corporate social responsibility. His research papers have been published at Applied Economics, Journal of Management, Management Review, Journal of Financial Studies, Review of Securities and Futures Markets, Sun Yat-Sen Management Review, NTU Management Review, Asia-Pacific Economic and Management Review, Asia Pacific Management Review, Taiwan Banking & Finance Quarterly, Fu Jen Management Review, Securities Services Review, Contemporary Management Research, International Journal of Innovation and Learning, International Journal of Operations & Production Management, and Journal of Sustainable Finance & Investment. Chen-Hsun Lee is Assistant Professor of Department of Money and Banking, National Kaohsiung First University of Science and Technology. He completed his Ph. D. degree at Ph. D. Programs in Management, National Kaohsiung First University of Science and Technology, Taiwan. His research areas include management science, internet finance, and corporate social responsibility. His research papers have been published at Applied Economics, Sun Yat-sen Management Review, Romanian journal of economic forecasting, Review of Pacific Basin Financial Markets and Policies, Advances in Financial Planning and Forecasting, Journal of China Tourism Research, Tourism Analysis, Journal of Asia-Pacific Business, Applied Science and Management Research, Economics Bulletin, Cogent Economics and Finance, and Journal of Sustainable Finance & Investment.