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Appears in Collections:Accounting and Finance Journal Articles
Peer Review Status: Refereed
Title: Do shareholders punish or reward excessive CSR engagement? The moderating effect of cash flow and firm growth
Author(s): Al-Shaer, Habiba
Uyar, Ali
Kuzey, Cemil
Karaman, Abdullah
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Keywords: Excessive CSR
Firm value
Cash flow
Firm growth
Stakeholder theory
Financial slack theory
Issue Date: Jul-2023
Date Deposited: 22-Feb-2024
Citation: Al-Shaer H, Uyar A, Kuzey C & Karaman A (2023) Do shareholders punish or reward excessive CSR engagement? The moderating effect of cash flow and firm growth. <i>International Review of Financial Analysis</i>, 88, Art. No.: 102672.
Abstract: Although extensive past research has studied the connection between corporate social responsibility (CSR) and firm value, it has rarely discriminated between optimal and excessive CSR. Thus, we addressed this issue by examining whether shareholders punish or reward excessive CSR engagement through the moderating effect of cash flow and firm growth. We applied country–industry–year fixed-effects (FE) regression to a cross-country sample of 43,803 firm-year observations between 2002 and 2019. The findings show that while both optimal and excessive CSR increase firm value, optimal CSR has greater value relevance than excessive CSR for shareholders. However, although cash flow positively moderates the relationship between optimal and excessive CSR and firm value, firm growth negatively moderates this relationship. The findings are robust regarding alternative CSR proxies, industry-adjusted firm value measures, public governance indicators, and endogeneity concerns.
DOI Link: 10.1016/j.irfa.2023.102672
Rights: This is an open access article distributed under the terms of the Creative Commons CC-BY license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. You are not required to obtain permission to reuse this article. To request permission for a type of use not listed, please contact Elsevier Global Rights Department.
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