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Corporate social responsibility, employee productivity and firm valuation

Author

Listed:
  • Shieh-Liang Chen
  • Cheng-Kun Liu
  • Chia-Ying Liu

Abstract

This paper first examines whether the more investments in corporate social responsibility (CSR), the less likely the share prices will be undervalued by the market. Secondly, we analyse whether there is a positive correlation between the spending on CSR and the company's productivity and explore the impact of CSR on future financial performance of a firm. The findings show that if the spending on CSR is high in the prior or/and current periods, current share prices are less likely to be undervalued. A stronger focus on CSR in the prior or/and current periods does not lead to higher productivity. This is possible because the input of CSR has no influence on the incentives to employees. In addition, the more efforts in CSR in the prior or current periods, the better is the future financial performance. This study, hence, concludes that CSR input can mitigate undervaluation and improve future operation performance.

Suggested Citation

  • Shieh-Liang Chen & Cheng-Kun Liu & Chia-Ying Liu, 2019. "Corporate social responsibility, employee productivity and firm valuation," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 19(2), pages 285-303.
    • Handle: RePEc:ids:ijbexc:v:19:y:2019:i:2:p:285-303
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    Citations

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    Cited by:

    1. Lashkaripour, Mohammadhossein, 2023. "ESG tail risk: The Covid-19 market crash analysis," Finance Research Letters, Elsevier, vol. 53(C).
    2. Sandra Aulia & Haula Rosdiana & Inayati Inayati, 2022. "Trust, Power, and Tax Risk into the “Slippery Slope”: A Corporate Tax Compliance Model," Sustainability, MDPI, vol. 14(22), pages 1-18, November.
    3. Habib Saragih, Arfah & Ali, Syaiful & Suwardi, Eko & Utomo, Hargo, 2024. "Finding the missing pieces to an optimal corporate tax savings: Information technology governance and internal information quality," International Journal of Accounting Information Systems, Elsevier, vol. 52(C).
    4. Christophe Boucher & Wassim Le Lann & Stéphane Matton & Sessi Tokpavi, 2024. "Are ESG ratings informative to forecast idiosyncratic risk?," Working Papers hal-04140193, HAL.
    5. Arfah Habib Saragih & Syaiful Ali, 2023. "Corporate tax risk: a literature review and future research directions," Management Review Quarterly, Springer, vol. 73(2), pages 527-577, June.
    6. Wu, Zihao & Gao, Jun & Luo, Chengdi & Xu, Hui & Shi, Guanqun, 2024. "How does boardroom diversity influence the relationship between ESG and firm financial performance?," International Review of Economics & Finance, Elsevier, vol. 89(PB), pages 713-730.
    7. Bing Yu & Shengxiong Wu & Mary Jane Lenard, 2022. "Do Ethical Companies Have High Stock Prices or High Returns?," JRFM, MDPI, vol. 15(2), pages 1-15, February.
    8. José Solana‐Ibáñez & Manuel Caravaca‐Garratón & Ricardo Teruel‐Sánchez, 2020. "Stakeholder perception on corporate reputation and management efficiency: Evidence from the Spanish Defence sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2381-2399, September.
    9. Po‐Hsuan Hsu & Kai Li & Chi‐Yang Tsou, 2023. "The Pollution Premium," Journal of Finance, American Finance Association, vol. 78(3), pages 1343-1392, June.
    10. Andrzej Janowski, 2020. "Philanthropy and the Contribution of Andrew Carnegie to Corporate Social Responsibility," Sustainability, MDPI, vol. 13(1), pages 1-26, December.
    11. Tianli Feng & Fan Yang & Biao Tan & Jihong Wu, 2022. "Corporate Social Irresponsibility Punishments from Stakeholders—Evidence from China," Sustainability, MDPI, vol. 14(8), pages 1-14, April.

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