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Corporate social responsibility and corporate political activity: what does data tell us?

Author

Listed:
  • Woon Leong Lin

    (Universiti Putra Malaysia)

  • Jo Ann Ho

    (Universiti Putra Malaysia)

  • Siong Hook Law

    (Universiti Putra Malaysia)

  • Murali Sambasivan

    (Thiagarajar School of Management)

Abstract

This study investigates the dynamic causality relationship between Corporate Social Responsibility (CSR) and the Corporate Political Activity (CPA). We employed the Vector AutoRegression (VAR) model in the Generalised Method of Moments (GMM) framework and considered all time-invariant characteristics of every organization. We studied a sample consisting of 100 of the World Most Admired Companies (WMAC) that listed in the Fortune list in the period ranging from 2007 to 2016. This study offered empirical evidence that showed that the CPA negatively affected the CSR; however, an increased CSR did not guarantee an increase in the CPA. The results of this paper were in direct contrast to the notion based on the hypothesis of the virtuous circle that described a positive correlation and mutual reinforcement between the CPA and CSR.

Suggested Citation

  • Woon Leong Lin & Jo Ann Ho & Siong Hook Law & Murali Sambasivan, 2019. "Corporate social responsibility and corporate political activity: what does data tell us?," Economics Bulletin, AccessEcon, vol. 39(3), pages 2237-2246.
    • Handle: RePEc:ebl:ecbull:eb-18-00852
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    File URL: http://www.accessecon.com/Pubs/EB/2019/Volume39/EB-19-V39-I3-P210.pdf
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    More about this item

    Keywords

    Corporate social responsibility (CSR); corporate political activity (CPA); panel vector autoregression (VAR); generalized method of moments (GMM); Granger causality;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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