(The) determinants and consequences of corporate social responsibility

Abstract

This thesis consists of three essays on corporate social responsibility (CSR). The first chapter examines whether CEO inside debt holdings improve CSR performance. This study suggests that a firm’s CSR performance increases with the level of CEO inside debt. Specifically, firms with higher CEO inside debt are associated with more stakeholder CSR than third-party CSR. The results show that the positive relation between CEO inside debt and CSR is weakened when CEOs are close to retirement, as well as when firms have high market power within an industry. The second chapter investigates whether a target firm’s CSR performance creates value for shareholders. This study finds that target CSR performance that is stronger than that of the acquirer firm, yields higher premiums for target shareholders. In addition, the positive valuation effect of CSR is more pronounced when well-governed acquirers conduct the takeover. The third chapter examines whether CSR performance affects information asymmetry using a quasi-natural experiment, the adoption of SFAS No. 123R, that mandates employee stock options (ESO) costs be recognized rather than disclosed at fair value. The results confirm that investment efficiency has increased in post-SFAS No. 123R and the benefits from improving financial reporting quality decrease for firms with a high level of CSR firms compare to those with a low level of CSR firms.