Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071)

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Abstract

We investigate the fundamental determinants and value implications of corporate social responsibility (CSR) around the world. We contrast three broad views on CSR: (1) it is a response to government failure; (2) it reflects individual and societal preferences; (3) it is an equilibrium result of a country's legal origin that shapes the corporations' tradeoff between shareholder and stakeholder values. Using public and proprietary country-level sustainability and firm-level CSR data, we find that: (a) Legal origins are more fundamental sources of CSR than political, social, and firm-level financial forces; (b) The English common low, widely-recognized as being most shareholder-oriented and economically efficient, fosters CSR and sustainability the least, while companies under the civil law origin assume most social responsibilities; (c) Globally, CSR contributes to shareholder value maximization.
Original languageEnglish
Place of PublicationTilburg
PublisherCentER, Center for Economic Research
Number of pages55
Volume2014-069
Publication statusPublished - 1 Dec 2014

Publication series

NameCentER Discussion Paper
Volume2014-069

Fingerprint

Finance
Corporate Social Responsibility
Shareholder value
Legal origin
Trade-offs
Government failure
Stakeholder values
Civil law
Social responsibility
Sustainability
Social sustainability
Shareholders

Keywords

  • Corporate social responsibility
  • sustainability
  • legal origins
  • stakeholder orientation

Cite this

Liang, H., & Renneboog, L. D. R. (2014). Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071). (CentER Discussion Paper; Vol. 2014-069). Tilburg: CentER, Center for Economic Research.
Liang, H. ; Renneboog, L.D.R. / Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071). Tilburg : CentER, Center for Economic Research, 2014. (CentER Discussion Paper).
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Liang, H & Renneboog, LDR 2014 'Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071)' CentER Discussion Paper, vol. 2014-069, CentER, Center for Economic Research, Tilburg.

Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071). / Liang, H.; Renneboog, L.D.R.

Tilburg : CentER, Center for Economic Research, 2014. (CentER Discussion Paper; Vol. 2014-069).

Research output: Working paperDiscussion paperOther research output

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AB - We investigate the fundamental determinants and value implications of corporate social responsibility (CSR) around the world. We contrast three broad views on CSR: (1) it is a response to government failure; (2) it reflects individual and societal preferences; (3) it is an equilibrium result of a country's legal origin that shapes the corporations' tradeoff between shareholder and stakeholder values. Using public and proprietary country-level sustainability and firm-level CSR data, we find that: (a) Legal origins are more fundamental sources of CSR than political, social, and firm-level financial forces; (b) The English common low, widely-recognized as being most shareholder-oriented and economically efficient, fosters CSR and sustainability the least, while companies under the civil law origin assume most social responsibilities; (c) Globally, CSR contributes to shareholder value maximization.

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Liang H, Renneboog LDR. Finance and Society: On the Foundations of Corporate Social Responsibility (Revised version of CentER DP 2013-071). Tilburg: CentER, Center for Economic Research. 2014 Dec 1. (CentER Discussion Paper).