Effect of CSR on the Overall and Components of Firm-Specific Earnings

• In Event: Doctoral Student Faculty Interchange II

Abstract

We investigate whether firm corporate social responsibility (CSR) performance is associated with firm-specific earnings and its components. Resource-based view (RBV) suggests firms use their unique resources, including CSR performance, to develop competitive advantages. Competitive advantages are reflected in earnings that are specific to the firm and not the industry overall. We therefore predict a positive association between CSR and firm-specific earnings. We find a positive association between overall CSR measures and firm-specific earnings. When we disaggregate firm-specific earnings into cash flows and accruals, our CSR measures are positively associated with both the level of firm-specific cash flows and accruals. We also examine the different CSR components to further understand the relation between the overall CSR measures and find that these associations are driven by CSR related to the environment and product characteristics and industry concerns. Collectively, our findings support RBV and contribute to the debate on CSR and firm performance. We also provide insights for managers and investors about components of firm earnings related to CSR activities and drivers of an effective application of CSR.
Keywords: CSR

Authors

• Hanbing Xing, Florida Atlantic University

• JiangBo HuangFu HuangFu, Florida Atlantic University - Boca

• Mark Kohlbeck, Florida Atlantic University