Political Connection of Socially Irresponsible Firms

• In Event: Reception with Effective Learning Strategies Displays

Abstract

In this paper we study the association between CSR concerns and the political connections to see whether CSR concerns actually drive firms to appoint more directors with political experiences in the subsequent year to counter firms’ potential risks related to different stakeholders. We find that firms with severe CSR concerns indeed have more politicians on the board in the following year, and more CSR concerns they have, more politicians on the board. When we disaggregate CSR into seven components, we uncover that firms with environment pollution, employee benefit concerns, poor governance, deficient product quality, insufficient community service, and lack of workforce diversity are more likely to appoint political directors on the board and have more politician with different connections with government and policy makers.

Authors

• Jun Guo, Rutgers University - Camden

• Sungsoo Kim, Rutgers University