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Cited by 3,137

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The relationship between corporate social responsibility and shareholder value: an empirical test of the risk management hypothesis

Godfrey, Paul C., Merrill, Craig B., Hansen, Jared M.·2009·Strategic Management Journal
DOI 10.1002/smj.750
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Abstract

Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance‐like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance‐like protection than other types. We delineate several firm and event specific characteristics that we expect to influence the link between CSR activities and an insurance effect. We then test our model using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993–2003. We find that participation in institutional CSR activities—those aimed at a firm's secondary stakeholders or society at large—provides an ‘insurance‐like’ benefit, while participation in technical CSRs—those activities targeting a firm's trading partners—yields no such benefits. We conclude by considering the implications of our findings for future theorizing and research into the economic value of CSR engagement. Copyright © 2008 John Wiley & Sons, Ltd.

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Cited by

Metadata

Authors
Godfrey, P. C., Merrill, C. B., & Hansen, J. M.
Venue
Strategic Management Journal
Publisher
Wiley
Published
2008-12-30
Volume
30
Issue
4
Pages
425-445
ISSN
  • 0143-2095 (ISSN-L)
  • 1097-0266
DOI
10.1002/smj.750
OpenAlex
W2054661316
Cited by
3,137
References
5
FWCI
82.48
Type
journal article
Language
en
Open access
closed
Licence
onlinelibrary.wiley.com/termsAndConditions#vor (vor)

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