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Agency problems and corporate social responsibility: Evidence from shareholder-creditor mergers

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  • Nguyen, Hien T.
  • Phan, Hieu V.
  • Vo, Hong

Abstract

We show that the presence of dual holders following the mergers between institutional shareholders and creditors of industry firms leads to a decrease in the firms' excessive corporate social responsibility (CSR) activities. The negative effect of dual holders on CSR activities is stronger for firms with more severe conflict of interest between shareholders and creditors or managerial agency problems. Further analysis indicates that decreased CSR activities are associated with greater firm value. Our findings provide evidence that dual holders mitigate agency-motivated CSR activities.

Suggested Citation

  • Nguyen, Hien T. & Phan, Hieu V. & Vo, Hong, 2023. "Agency problems and corporate social responsibility: Evidence from shareholder-creditor mergers," International Review of Financial Analysis, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finana:v:90:y:2023:i:c:s1057521923004532
    DOI: 10.1016/j.irfa.2023.102937
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    More about this item

    Keywords

    Corporate social responsibility; Dual holders; Agency problems; Mergers and acquisitions;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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