Competing by conducting good deeds: The peer effect of corporate social responsibility

Sibo Liu; Dejun Wu

doi:10.1016/j.frl.2015.10.013

Competing by conducting good deeds: The peer effect of corporate social responsibility

Sibo Liu
, Dejun Wu^*

^*Corresponding author for this work

Department of Accountancy, Economics and Finance

Research output: Contribution to journal › Journal article › peer-review

79 Citations (Scopus)

Abstract

How do firms respond to their competitors’ corporate social responsibility (CSR) behavior? We exploit a text-based definition for industry peers to show that the CSR behavior of firms is positively affected by the CSR level of their competitors. The relationship is robust after controlling for firm fixed effects, industry trend, and geographical trend. In addition, the CSR level in turn increases firm value, particularly for firms in highly competitive industries. Taken together, the evidence suggests that a firm's CSR policy is shaped by the peer effect, and managers can influence firm value through CSR behavior.

Original language	English
Pages (from-to)	47-54
Number of pages	8
Journal	Finance Research Letters
Volume	16
Early online date	24 Oct 2015
DOIs	https://doi.org/10.1016/j.frl.2015.10.013
Publication status	Published - Feb 2016

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 12 Responsible Consumption and Production

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10.1016/j.frl.2015.10.013

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@article{63be61ff683840f5b1306266c33360b5,

title = "Competing by conducting good deeds: The peer effect of corporate social responsibility",

abstract = "How do firms respond to their competitors{\textquoteright} corporate social responsibility (CSR) behavior? We exploit a text-based definition for industry peers to show that the CSR behavior of firms is positively affected by the CSR level of their competitors. The relationship is robust after controlling for firm fixed effects, industry trend, and geographical trend. In addition, the CSR level in turn increases firm value, particularly for firms in highly competitive industries. Taken together, the evidence suggests that a firm's CSR policy is shaped by the peer effect, and managers can influence firm value through CSR behavior.",

author = "Sibo Liu and Dejun Wu",

note = "Funding information: The authors are thankful to Chen Lin, Lai Wei, and Wensi Xie for helpful discussions. Dejun Wu acknowledges financial support from the Education Ministry of China (Project no. 14YJA630067). Publisher copyright: {\textcopyright} 2015 Elsevier Inc.",

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language = "English",

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journal = "Finance Research Letters",

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T1 - Competing by conducting good deeds

T2 - The peer effect of corporate social responsibility

AU - Liu, Sibo

AU - Wu, Dejun

N1 - Funding information: The authors are thankful to Chen Lin, Lai Wei, and Wensi Xie for helpful discussions. Dejun Wu acknowledges financial support from the Education Ministry of China (Project no. 14YJA630067). Publisher copyright: © 2015 Elsevier Inc.

PY - 2016/2

Y1 - 2016/2

N2 - How do firms respond to their competitors’ corporate social responsibility (CSR) behavior? We exploit a text-based definition for industry peers to show that the CSR behavior of firms is positively affected by the CSR level of their competitors. The relationship is robust after controlling for firm fixed effects, industry trend, and geographical trend. In addition, the CSR level in turn increases firm value, particularly for firms in highly competitive industries. Taken together, the evidence suggests that a firm's CSR policy is shaped by the peer effect, and managers can influence firm value through CSR behavior.

AB - How do firms respond to their competitors’ corporate social responsibility (CSR) behavior? We exploit a text-based definition for industry peers to show that the CSR behavior of firms is positively affected by the CSR level of their competitors. The relationship is robust after controlling for firm fixed effects, industry trend, and geographical trend. In addition, the CSR level in turn increases firm value, particularly for firms in highly competitive industries. Taken together, the evidence suggests that a firm's CSR policy is shaped by the peer effect, and managers can influence firm value through CSR behavior.

UR - https://www.scopus.com/pages/publications/84949675020

U2 - 10.1016/j.frl.2015.10.013

DO - 10.1016/j.frl.2015.10.013

M3 - Journal article

SN - 1544-6123

VL - 16

SP - 47

EP - 54

JO - Finance Research Letters

JF - Finance Research Letters

ER -

Competing by conducting good deeds: The peer effect of corporate social responsibility

Abstract

UN SDGs

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