The angel-halo effect: How increases in corporate social responsibility and irresponsibility relate to firm performance

摘要

Purpose - This paper aims to examine how increases in corporate social responsibility (CSR) and corporate social irresponsibility (CSiR) relate to firm performance. Further, this paper investigates how increases in CSR (CSiR) while CSiR (CSR) is present relate to three measures of firm performance: profitability, management efficiency and market valuation. Design/methodology/approach - Using over 10,000 observations from 2009-2013 and combined data from Sustainalytics and Compustat, this paper examines how increases in either CSR or CSiR relate to firm performance. Findings - The paper finds that increased CSR significantly relates to increased firm performance in all three measures, and that increased CSiR significantly relates to decreased profitability only. Furthermore, increased CSR when CSiR is present relates to increased efficiency and market valuation. Finally, increased CSiR when CSR is present relates to increased profitability and efficiency. The results suggest that CSR dominates the relationship to firm performance, as it was positively related to all three measures of firm performance, and when CSR and CSiR exist simultaneously, CSR has a dominant positive effect. Research limitations/implications - The study sample consists of US firms only from 2009-2013, thus the generalizability of the results to other countries and periods is unknown. Practical implications - The results demonstrating differing effects based on the measure of firm performance suggest that managers should be specific with which measures are used to gauge the impact of CSR and CSiR. In addition, managers would be wise to invest in CSR, as the results suggest that they can improve profitability, efficiency and market value. Even further, the empirically identified angel-halo effect suggests that investments in CSR may counter any potential negative effects from CSiR. Finally, the latter results suggest that firms can "get away" with some degree of CSiR when CSR is present. Originality/value - By examining changing levels of CSR and CSiR independently and conjunctly across various measures of firm performance, this paper found a dominating role for CSR, which is labeled as the angel-halo effect.