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Investment Inefficiency and Corporate Social Responsibility

Author

Listed:
  • Tadesse Getacher Engida

    (Wageningen University & Research (WUR))

  • Christopher F. Parmeter

    (University of Miami)

  • Xudong Rao

    (North Dakota State University)

  • Alfons G.J.M. Oude Lansink

    (Wageningen University & Research (WUR))

Abstract

We demonstrate how earlier approaches to model the impact that corporate social responsibility (CSR) has on investment inefficiency are likely to be incorrect and propose use of the stochastic frontier methodology to model this relationship. We apply the approach to a sample of European listed companies, providing robust evidence that CSR performance is negatively associated with investment inefficiency. This result is consistent with the claim that high CSR firms are characterized by low information asymmetry and high stakeholder solidarity, which may represent a source of competitive advantage, helping to decrease investment inefficiency.

Suggested Citation

  • Tadesse Getacher Engida & Christopher F. Parmeter & Xudong Rao & Alfons G.J.M. Oude Lansink, 2022. "Investment Inefficiency and Corporate Social Responsibility," Journal of Productivity Analysis, Springer, vol. 58(1), pages 95-108, August.
    • Handle: RePEc:kap:jproda:v:58:y:2022:i:1:d:10.1007_s11123-022-00641-4
    DOI: 10.1007/s11123-022-00641-4
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    Cited by:

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    2. Yang, Zhuyu & Barroca, Bruno & Laffréchine, Katia & Weppe, Alexandre & Bony-Dandrieux, Aurélia & Daclin, Nicolas, 2023. "A multi-criteria framework for critical infrastructure systems resilience," International Journal of Critical Infrastructure Protection, Elsevier, vol. 42(C).
    3. Martinez-Cillero, Maria & Lawless, Martina & O'Toole, Conor, 2023. "Analysing SME investment, financing constraints and its determinants. A stochastic frontier approach," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 578-588.
    4. MCarmen Martínez‐Victoria & Alfons Oude Lansink, 2024. "Risk and return efficiency of manufacturing firms: Integrating corporate social responsibility performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3735-3744, September.

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