Date of Award

12-14-2015

Document Type

Open Access Dissertation

Department

Moore School of Business

First Advisor

Omrane Guedhami

Second Advisor

Chuck C.Y. Kwok

Abstract

In recent years, corporate social responsibility (CSR) activities, which are firms actions that go above and beyond the interests of the firm to further the social good, have become common practice. While extant literature on CSR largely investigates the consequences of CSR activities, only a few studies identify the determinants of CSR. This dissertation extends a growing literature on the determinants of CSR by exploring the impact of corporate governance on CSR activities in three related essays. The first essay investigates the impact of family control on CSR performance. Using newly collected data on the ultimate ownership structure of publicly traded firms in nine East Asian economies, we find that family control is associated with lower CSR performance, consistent with the expropriation hypothesis of family control. The negative relationship between family control and CSR is robust to alternative CSR measures, alternative estimation methods, and a different definition of family firms, as well as to endogeneity tests, subsample tests, comparisons with other large shareholders, and comparisons with family firms from other countries. In additional analyses, we find that CSR underperformance is more pronounced in family firms with greater agency problems and in countries with weaker institutions. These findings contribute to understanding the determinants of CSR and highlight the importance of corporate governance and the institutional environment in improving CSR performance of family-controlled firms. The second essay assesses the CSR performance of newly privatized firms (NPFs) to understand the social impact of privatization. Using data of NPFs from 41 countries over the 2002-2010 period, we find strong evidence that NPFs have better CSR performance than other publicly listed firms. Controlling for firm-level and country-level variables, state ownership has a negative impact on CSR performance, while foreign and employee ownership have positive impacts on CSR performance in NPFs. We also find that country-level institutions play a moderating role in the relationship between ownership structure and CSR performance in NPFs. In additional analyses, we find that CSR performance helps to improve the financial performance of NPFs. Specifically, NPFs with residual state ownership and better CSR performance exhibit higher valuation and lower equity financing costs. The third essay investigates the dynamics of cross-listing and CSR. Using a sample of 11,594 firm-year observations from 54 countries over the period 2002-2011, we find that cross-listed firms have better CSR performance than non-cross-listed domestic firms. This result is robust to endogeneity and different types of cross-listing. We also find that CSR increases (decreases) significantly after cross-listing in (delisting from) the U.S. market. The positive impact of cross-listing on CSR performance is stronger for firms from countries with weaker institutions and for firms in industries with high litigation risk. Finally, we find that, through better CSR performance, cross-listed firms exhibit higher valuation.

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