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.
|Place of Publication||Tilburg|
|Publisher||CentER, Center for Economic Research|
|Number of pages||55|
|Publication status||Published - 1 Dec 2014|
|Name||CentER Discussion Paper|
- Corporate social responsibility
- legal origins
- stakeholder orientation
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.