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Corporate social responsibility and myopic management practice: Is there a link?

Author

Listed:
  • David K. Ding

    (Singapore Management University)

  • Christo Ferreira

    (Massey University)

  • Vu Minh Ngo

    (University of Economics Ho Chi Minh City)

  • Phuc V. Nguyen

    (University of Economics Ho Chi Minh City)

  • Udomsak Wongchoti

    (Massey University)

Abstract

A Corporate Social Responsibility (CSR)-myopic firm is one that experiences greater-than-normal operating profits but scores worse in its CSR ‘strength’ or ‘concern’ rankings than is normally expected during the same year. We show that myopic behavior in CSR concerns (strengths) are positively (negatively) related to myopia in other conventional discretionary investments such as marketing, R&D, and capital expenditures. We find that large, highly leveraged firms are less likely to be myopic regarding CSR concerns and other discretionary investments; such firms are more likely to engage in myopic behaviors concerning CSR strength. Myopic firms tend to have lower contemporaneous and future risk-adjusted abnormal returns.

Suggested Citation

  • David K. Ding & Christo Ferreira & Vu Minh Ngo & Phuc V. Nguyen & Udomsak Wongchoti, 2024. "Corporate social responsibility and myopic management practice: Is there a link?," Review of Quantitative Finance and Accounting, Springer, vol. 62(1), pages 271-308, January.
    • Handle: RePEc:kap:rqfnac:v:62:y:2024:i:1:d:10.1007_s11156-023-01212-w
    DOI: 10.1007/s11156-023-01212-w
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    More about this item

    Keywords

    CSR; Corporate myopia; Discretionary investment; Earnings quality;
    All these keywords.

    JEL classification:

    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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