تاثیر مسئولیت اجتماعی شرکت ها بر چرخه عمر شرکت
Abstract
1- Introduction
2- Related research and hypothesis development
3- Data and methodology
4- Results
5- Conclusion
Note
References
Abstract
Purpose – The purpose of this paper is to assess US-based firms from 2005 to 2015 to determine whether firms with better corporate social responsibility (CSR) performance will allocate capital through their life-cycle to better maintain or extend total assets. Design/methodology/approach – Kinder, Lydenberg, Domini Research & Analytics social performance rating scores were used to measure CSR performance in an initial sample of 19,707 firm-year observations. Firms are first classified into stages including introduction, growth, maturity, and decline, and use multiclass linear discriminant analysis, the Dickinson classification scheme (Dickinson, 2011), and the ratio of retained earnings to total assets (RETA) as life-cycle proxies. Life-cycle was formulated based on a broad set of accounting data sourced from Compustat. Various corporate characteristics from the CRSP database were used to classify all sample firms into five equal groups based on their CSR performance. Findings – A firm’s equity and debt issuance assume a hump shape over the life-cycle under CSR practice, and higher-CSR firms face fewer significant issues as they mature; payout, RETA, and free cash flow decreased from high-CSR performance firms to low-CSR performance firms; and cash holdings also exhibit a hump shape over the life-cycle and higher-CSR practices are associated with significantly lower cash holdings. Originality/value – CSR performance is a useful predictor for forecasting firm life-cycle and superior CSR performance ensures efficient capital allocation throughout firm life-cycle. Furthermore, CSR practice is an indicator of firm life-cycle sustainability and indicates a firm’s future cash flow patterns.
Introduction
Corporate social responsibility (CSR) has emerged as a critical issue over the past two decades, not only due to increased consumer awareness, regulation, and corporate governance but also as a factor associated with long-term firm performance (Lin et al., 2009; Roberts and Dowling, 2002). This increased attention to CSR has raised several questions: what benefits do firms gain from enhanced CSR practice, and how does CSR relate to managerial performance? Empirical studies have sought to satisfy these questions through investigating various aspects of CSR, including capital allocation efficiency (Bhandari and Javakhadze, 2017), firm cash holdings (Cheung, 2016), cost of equity capital (Gregory et al., 2014; Girerd-Potin et al., 2014; Reverte, 2012), cost of corporate bonds (Ge and Liu, 2015), cost of bank loans (Goss and Roberts, 2011), financial transparency (Dhaliwal et al., 2014), variable competitiveness and increased stakeholder trust (Antonia García-Benau et al., 2013), dividend policy (Kim and Jeon, 2015), financial risk (Hsu and Chen, 2015), and financial performance (Nelling and Webb, 2009; Surroca et al., 2010). According to Owen and Yawson (2010), they exhibit a highly significant and positive relation between firm life cycle and the likelihood of becoming a bidder. However, they also show that life cycle has a negative impact on abnormal returns generated on the announcement of a deal, although they were unable to distinguish between the returns received by firms at different stages in their life cycle. This raises the need to understand CSR firms’ financial decision-making behavior at different life-cycles. However, CSR performance has implications for a firm’s capital allocation throughout its life-cycle, including policies for financing, capital structure, investment, and cash and dividends (i.e. cash holding, payout ratio, retained earnings, and free cash flow (FCF)). Ethical and integrative theories of CSR (Kim et al., 2012) suggest that socially responsible executives/firms tend to stick to a higher standard of corporate behavior consistent with their CSR goals. Thus, firms intent on accounting for global community benefits, human rights, environmental protection, and product safety, must do so in a way that still provides shareholders profits and ensures long-term sustainable operations. Given excess/positive FCF, firms tend to overinvest in negative NPV projects (Richardson, 2006; Jensen, 1986) rather than distribute the cash to shareholders which would leave the firm vulnerable to future acquisition attempts (Zhang, 2016). However, certain governance structures, such as firms with supermajority voting provisions and outstanding shares owned by block holders, appear to mitigate overinvestment activities (Zhang, 2016) to better maintain total assets. Therefore, cash holding, payout ratio, retained earnings, and FCF will be more sensitive to capital allocation in equity or debt issuance for CSR firms throughout their life-cycle. Empirical results in the financial theory suggest that a firm will benefit by reducing financing costs (Gregory et al., 2014; Ge and Liu, 2015; Goss and Roberts, 2011) and cash holdings (Cheung, 2016) under higher-CSR practice. This study explores whether and how CSR performance affects firm-level capital resource allocation and firm performance under different life-cycles.