Journal of Business Ethics
July 25, 2016, pp 1–17
 

Kwang Hwa Jeong, Seok Woo Jeong, Woo Jae Lee, Seong Ho Bae
https://link.springer.com/article/10.1007/s10551-016-3273-9
DOI: 10.1007/s10551-016-3273-9

Abstract
This paper investigates whether the pattern of firms’ corporate social responsibility (CSR) activities affects firm value. If firms do permanently CSR activities for strategic purposes, firms’ value is more likely to increase. Using firms known to do CSR in Korea, we examine the valuation effect by adopting an earnings response coefficient (ERC) model and document firms with permanent CSR activities, which show higher ERCs than other firms regardless of the level of CSR activities. This result partly explains the inconsistency among the results of previous studies by showing the differential implication for firm value depending on the CSR activity pattern. Also, the results of our paper imply that investors need to consider the pattern of firms’ CSR activities in their economic decision making.

Keywords
Agency costs CSR activity permanency CSR activity pattern Earnings response coefficients Strategic behavior Stakeholder’s view