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Publications
  • 2015
  • Working Paper
  • HBS Working Paper Series

The Value of Corporate Citizenship: Protection

By: Dylan Minor
  • Format:Print
  • | Language:English
  • | Pages:44
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Abstract

We explore the notion that corporate citizenship, as obtained through Corporate Social Responsibility (CSR), is used by managers to protect firm value, helping their firm better withstand negative business shocks. We formally explore two parallel mechanisms for such protection—one of building moral capital (CSR Contributions) and another of improving investor posteriors (CSR Investments). We find some theoretical and empirical support for both of these, but in different settings. In particular, we find that firms with higher CSR Investments enjoy an average of $1 billion of saved firm value upon an adverse event. In contrast, CSR Contribution firms lose value (on average) upon an event, possibly due to disingenuous contributions. Meanwhile, due to managerial moral hazard, firms with high levels of CSR Contributions face adverse events more often, whereas those with high levels of CSR Investments face them less often.

Keywords

Value; Corporate Social Responsibility and Impact; Finance

Citation

Minor, Dylan. "The Value of Corporate Citizenship: Protection." Harvard Business School Working Paper, No. 16-021, August 2015.
  • SSRN
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More from the Author

    • 2016
    • Faculty Research

    Workplace Design: The Good, the Bad, and the Productive

    By: Michael Housman and Dylan Minor
    • June 2016
    • Journal of Business Ethics

    Corporate Governance and Executive Compensation for Corporate Social Responsibility

    By: Bryan Hong, Zhichuan (Frank) Li and Dylan B. Minor
    • 2016
    • Faculty Research

    The Organization of Non-market Strategy

    By: Dylan B. Minor
More from the Author
  • Workplace Design: The Good, the Bad, and the Productive By: Michael Housman and Dylan Minor
  • Corporate Governance and Executive Compensation for Corporate Social Responsibility By: Bryan Hong, Zhichuan (Frank) Li and Dylan B. Minor
  • The Organization of Non-market Strategy By: Dylan B. Minor
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