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Permanency of CSR Activities and Firm Value

Author

Listed:
  • Kwang Hwa Jeong

    (Kangwon National University)

  • Seok Woo Jeong

    (Korea University Business School)

  • Woo Jae Lee

    (Chungnam National University)

  • Seong Ho Bae

    (Kyungpook National University)

Abstract

This paper investigates whether the pattern of firms’ corporate social responsibility (CSR) activities affects firm value. If firms do permanently CSR activities for strategic purposes, firms’ value is more likely to increase. Using firms known to do CSR in Korea, we examine the valuation effect by adopting an earnings response coefficient (ERC) model and document firms with permanent CSR activities, which show higher ERCs than other firms regardless of the level of CSR activities. This result partly explains the inconsistency among the results of previous studies by showing the differential implication for firm value depending on the CSR activity pattern. Also, the results of our paper imply that investors need to consider the pattern of firms’ CSR activities in their economic decision making.

Suggested Citation

  • Kwang Hwa Jeong & Seok Woo Jeong & Woo Jae Lee & Seong Ho Bae, 2018. "Permanency of CSR Activities and Firm Value," Journal of Business Ethics, Springer, vol. 152(1), pages 207-223, September.
    • Handle: RePEc:kap:jbuset:v:152:y:2018:i:1:d:10.1007_s10551-016-3273-9
    DOI: 10.1007/s10551-016-3273-9
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