The value of corporate social responsibility: decomposing positive and negative deviations from the norm
Journal Contribution ResearchOnline@JCUAbstract
[Extract] Classical finance theory suggests that the primary purpose of companies is to maximise shareholders' value (Berle and Means, 1932; Friedman, 1970). However, there is a growing counter-argument that firms should also be more socially conscious, consider wider stakeholder opinions and follow a more balanced business model that can benefit both the bottom line and society (Freeman, 1984). ... In order to understand what the right approach is, we will conduct a reduced form analysis in this study. Specifically, we explore whether a firm’s valuation can be positively or negatively affected if its CSR activities deviate from its historical norm around the world. This deviation from the norm measure is constructed based on country, industry and time series averages for each firm. Given that most of the firms around the world have already engaged in some level of CSR activities, we study the consequence on a firm’s valuation if it chooses to systematically deviate in either the positive or negative direction, being a positive or negative trend.
Journal
Nomura Journal of Asian Capital Markets
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Nomura Journal of Asian Capital Markets
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4
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1
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6
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Nomura Foundation
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