Corporate social responsibility, employee productivity and firm valuation
by Shieh-Liang Chen; Cheng-Kun Liu; Chia-Ying Liu
International Journal of Business Excellence (IJBEX), Vol. 19, No. 2, 2019

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.

Online publication date: Thu, 12-Sep-2019

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