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Corporate headquarters relocation and CSR performance

Author

Listed:
  • Fatemi, Ali
  • Fooladi, Iraj
  • Sy, Oumar
  • Zaman, Ashraf

Abstract

This study examines the relationship between corporate headquarters relocation decisions and corporate social responsibility (CSR). If the cost-savings motive is the primary force behind the relocation decision, we would expect to observe a reduction in CSR commitments of relocating firms. Our results fail to provide support for the occurrence of such a reduction, even when the move affords the firm an opportunity to do so. Following a move, firms do not reduce their CSR commitments. On the contrary, the average firm tends to significantly improve its CSR scores in the “environment” and “overall” categories. Our findings hold even after accounting for fixed effects, control variables, and addressing issues of heterogeneity and endogeneity. In investigating the driver of this outcome, we find that the local political environment of the new headquarters location plays an important role. In particular, a stronger tendency to increase CSR activities is mostly associated with relocations to a Democratic rather than a Republican state.

Suggested Citation

  • Fatemi, Ali & Fooladi, Iraj & Sy, Oumar & Zaman, Ashraf, 2024. "Corporate headquarters relocation and CSR performance," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 622-637.
    • Handle: RePEc:eee:reveco:v:89:y:2024:i:pb:p:622-637
    DOI: 10.1016/j.iref.2023.10.014
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