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Ethical image, corporate social responsibility, and R&D valuation

Author

Listed:
  • Ho, Simon S.M.
  • Li, Annie Yuansha
  • Tam, Kinsun
  • Tong, Jamie Y.

Abstract

This study examines whether socially responsible firms carry higher research and development (R&D) valuation, and how product market competition affects this relationship. From a sample of U.S. firms over the period 1995–2010, we find firms with stronger corporate social responsibility (CSR) performance to have higher R&D valuation. This result supports the view that CSR efforts create an ethical and healthy corporate image which lends credence to its R&D projects. As expeted, the above positive relationship between CSR efforts and R&D valuation is significant only in highly competitive industries. This study contributes to the literature by demonstrating that ethical image affects the market's perception on R&D investments and the valuation of the firm.

Suggested Citation

  • Ho, Simon S.M. & Li, Annie Yuansha & Tam, Kinsun & Tong, Jamie Y., 2016. "Ethical image, corporate social responsibility, and R&D valuation," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 335-348.
    • Handle: RePEc:eee:pacfin:v:40:y:2016:i:pb:p:335-348
    DOI: 10.1016/j.pacfin.2016.02.002
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