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Valuation effects of corporate social responsibility

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  • Fatemi, Ali
  • Fooladi, Iraj
  • Tehranian, Hassan

Abstract

This paper develops a valuation model of the firm that provides for the expenditure of corporate resources in support of community, social or environmental causes. We show that under certain circumstances CSR expenditures create value for the firm. We also test our model by simulations and confirm that, at least under some conditions, CSR does pay off in the form of value creation.

Suggested Citation

  • Fatemi, Ali & Fooladi, Iraj & Tehranian, Hassan, 2015. "Valuation effects of corporate social responsibility," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 182-192.
    • Handle: RePEc:eee:jbfina:v:59:y:2015:i:c:p:182-192
    DOI: 10.1016/j.jbankfin.2015.04.028
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate social responsibility; Valuation; Shareholders’ value;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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