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Crime, Punishment and the Halo Effect of Corporate Social Responsibility

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  • Harrison Hong
  • Inessa Liskovich

Abstract

Three reasons are often cited for the value of corporate social responsibility: product quality signalling, delegated giving, and the halo effect. Previous tests cannot separate these channels because they focus on consumers, who value all three. We focus on prosecutors, who are only susceptible to the halo effect. Using Foreign Corrupt Practices Act enforcements, we find that social responsibility is associated with 2 million dollars less in fines, though it is uncorrelated with bribe characteristics and cooperation, which should entirely determine sanctions following Becker (1974). We show that this bias is likely a halo effect and not prosecutorial conflict of interest.

Suggested Citation

  • Harrison Hong & Inessa Liskovich, 2015. "Crime, Punishment and the Halo Effect of Corporate Social Responsibility," NBER Working Papers 21215, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:21215
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    References listed on IDEAS

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    JEL classification:

    • G0 - Financial Economics - - General
    • K0 - Law and Economics - - General

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