The effect of firm maturity on corporate social responsibility (CSR): do older firms invest more in CSR?

ABSTRACT

Motivated by the literature on corporate life cycles, we explore the effect of firm maturity on corporate social responsibility (CSR). Our results based on over 26 000 observations across 21 years reveal that more mature firms invest significantly more in CSR. Furthermore, we find that the effect of firm maturity is not uniform across different categories of CSR. As firms get older, they become much more responsible in terms of diversity and environmental awareness, whereas the effect of firm ageing is much weaker in terms of human rights and product safety. Our study is the first to link corporate life cycles to CSR.

KEYWORDS:

• Corporate social responsibility
• CSR
• corporate life cycles
• corporate ageing
• firm age

JEL CLASSIFICATION:

• M14
• G30

Notes

¹ Our estimation is as follows. Firm age changes by 26 years as it goes from the 25^th to the 75^th percentile. We multiply 26 by the coefficient of firm age in Model 1 in Table 2 (26 × 0.006 = 0.156). We then estimate that this magnitude of change, 0.156, represents about 6% of the SD of the CSR score (0.156/2.723 = 0.057).