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Corporate Governance and Corporate Social Performance

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  • Kurt A. Desender
  • Mircea Epure

Abstract

By integrating the agency and stakeholder perspectives, this study aims to provide a systematic understanding of the firm- and institutional-level corporate governance factors that affect corporate social performance (CSP). We argue that recognizing differences in the distribution and timeframe of the costs and benefits to shareholders and other stakeholders is crucial to understand what drives CSP and to conciliate the existing perspectives. We analyze a large cross-country panel dataset and reveal that CSP is positively associated with board independence, but negatively with ownership concentration. These results underscore that the allocation of resources to CSP is lower when shareholders are powerful. Furthermore, these findings indicate that independent directors should be understood as agents in their own right, not only focused on defending shareholder interests. We also find that CSP is negatively related to investor protection and shareholder-oriented environments, while it is positively related to egalitarian environments. Finally, we jointly analyze firm-level drivers and institutional contexts.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 730.

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Date of creation: Apr 2014
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Handle: RePEc:bge:wpaper:730

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Keywords: corporate social performance (responsibility); corporate governance; agency theory; stakeholder theory;

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