MAKING THE CONNECTION: AN INTERNATIONAL STUDY OF CORPORATE SOCIAL RESPONSIBILITY AND FIRM VALUE

Abstract

We investigate country-level institutional frameworks as a systemic driver of corporate social responsibility (CSR) value creation on an international level, providing evidence for the valuation impact of CSR using 132,645 observations of 2,540 firms from 44 countries by studying the constituents of the MSCI AC World Index over the time period of 2009 to 2014. We hypothesize that CSR creates value and predict that the CSR-firm value relation is significantly affected by the socio-economic and political regimes that firms operate in. Consistent with literature and our hypotheses, our findings show that CSR contributes positively to firm value, and find that the positive effect of CSR on firm value is more pronounced in countries with weaker institutional frameworks.