The influence of corporate social responsibility on investment efficiency and innovation

Kirsten A. Cook, Andrea M. Romi, Daniela Sánchez, Juan Manuel Sánchez

Research output: Contribution to journalArticle

17 Scopus citations

Abstract

We examine two important channels through which corporate social responsibility (CSR) affects firm value: investment efficiency and innovation. We find that firms with higher CSR performance invest more efficiently: these firms are less prone to invest in negative net present value (NPV) projects (overinvestment) and less prone to forego positive NPV projects (underinvestment). We also find that firms with higher CSR performance generate more patents and patent citations. Mediation analysis indicates that firms with higher CSR performance are more profitable and valuable, consequences partially attributable to efficient investments and innovation. These results, robust to alternate model specifications, lend support to enlightened stakeholder theory.

Original languageEnglish
Pages (from-to)494-537
Number of pages44
JournalJournal of Business Finance and Accounting
Volume46
Issue number3-4
DOIs
StatePublished - Mar 1 2019

Keywords

  • corporate social responsibility
  • firm performance
  • innovation
  • investment efficiency
  • mediation

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