Publication: The Effect of Corporate Governance on Corporate Social Responsibility
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Issued Date
2016-02-01
Resource Type
ISSN
20416156
20419945
20419945
Other identifier(s)
2-s2.0-84961601444
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Mahidol University
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SCOPUS
Bibliographic Citation
Asia-Pacific Journal of Financial Studies. Vol.45, No.1 (2016), 102-123
Suggested Citation
Pandej Chintrakarn, Pornsit Jiraporn, Jang Chul Kim, Young Sang Kim The Effect of Corporate Governance on Corporate Social Responsibility. Asia-Pacific Journal of Financial Studies. Vol.45, No.1 (2016), 102-123. doi:10.1111/ajfs.12121 Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/43591
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Title
The Effect of Corporate Governance on Corporate Social Responsibility
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Abstract
© 2016 Korean Securities Association. Motivated by agency theory, we explore the effect of corporate governance quality on corporate social responsibility (CSR), using the governance standards provided by Institutional Shareholder Services (ISS). Our evidence reveals that firms with more effective governance make significantly less investment in CSR. It appears that managers tend to over-invest in CSR and are forced to reduce CSR investments when corporate governance is more effective. In particular, an improvement in governance quality by one standard deviation translates into a decline in CSR investments by 7.16%. Our fixed-effects analysis also shows that, within firms, when governance quality improves over time, CSR investments decline significantly. Using the passage of the Sarbanes-Oxley Act of 2002 as an exogenous shock that improves the quality of corporate governance, we demonstrate that high-quality governance is not merely associated with, but rather brings about, lower CSR investments.