Investment Inefficiency and Corporate Social Responsibility

Tadesse G. Engida; Christopher F. Parmeter; Xudong Rao; Alfons G.J.M. Oude Lansink

doi:10.1007/s11123-022-00641-4

Investment Inefficiency and Corporate Social Responsibility

Tadesse G. Engida^*, Christopher F. Parmeter, Xudong Rao, Alfons G.J.M. Oude Lansink

^*Corresponding author for this work

Research output: Contribution to journal › Article › Academic › peer-review

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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.

Original language	English
Pages (from-to)	95-108
Number of pages	14
Journal	Journal of Productivity Analysis
Volume	58
Issue number	1
DOIs	https://doi.org/10.1007/s11123-022-00641-4
Publication status	Published - 27 Jun 2022

Keywords

Partly linear model
Stochastic frontier model
corporate social responsibility
FRONTIER ESTIMATION
MANAGEMENT
NONFINANCIAL DISCLOSURE
DETERMINANTS
PERFORMANCE
INFORMATION
FIRMS
Corporate social responsibility
FINANCIAL-REPORTING QUALITY
CONSTRAINTS
EFFICIENCY

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@article{346c30f807f24af29358720e2246327d,

title = "Investment Inefficiency and Corporate Social Responsibility",

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. Weapply 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 lowinformation asymmetry and high stakeholder solidarity, which may represent a source of competitive advantage, helping to decrease investment inefficiency. ",

keywords = "Partly linear model, Stochastic frontier model, corporate social responsibility, FRONTIER ESTIMATION, MANAGEMENT, NONFINANCIAL DISCLOSURE, DETERMINANTS, PERFORMANCE, INFORMATION, FIRMS, Corporate social responsibility, FINANCIAL-REPORTING QUALITY, CONSTRAINTS, EFFICIENCY",

author = "Engida, {Tadesse G.} and Parmeter, {Christopher F.} and Xudong Rao and {Oude Lansink}, {Alfons G.J.M.}",

note = "data source: ORBIS (financial data) and Data on CSR were obtained from Sustainalytics",

year = "2022",

month = jun,

day = "27",

doi = "10.1007/s11123-022-00641-4",

language = "English",

volume = "58",

pages = "95--108",

journal = "Journal of Productivity Analysis",

issn = "0895-562X",

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number = "1",

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TY - JOUR

T1 - Investment Inefficiency and Corporate Social Responsibility

AU - Engida, Tadesse G.

AU - Parmeter, Christopher F.

AU - Rao, Xudong

AU - Oude Lansink, Alfons G.J.M.

N1 - data source: ORBIS (financial data) and Data on CSR were obtained from Sustainalytics

PY - 2022/6/27

Y1 - 2022/6/27

N2 - 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. Weapply 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 lowinformation asymmetry and high stakeholder solidarity, which may represent a source of competitive advantage, helping to decrease investment inefficiency.

AB - 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. Weapply 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 lowinformation asymmetry and high stakeholder solidarity, which may represent a source of competitive advantage, helping to decrease investment inefficiency.

KW - Partly linear model

KW - Stochastic frontier model

KW - corporate social responsibility

KW - FRONTIER ESTIMATION

KW - MANAGEMENT

KW - NONFINANCIAL DISCLOSURE

KW - DETERMINANTS

KW - PERFORMANCE

KW - INFORMATION

KW - FIRMS

KW - Corporate social responsibility

KW - FINANCIAL-REPORTING QUALITY

KW - CONSTRAINTS

KW - EFFICIENCY

U2 - 10.1007/s11123-022-00641-4

DO - 10.1007/s11123-022-00641-4

M3 - Article

SN - 0895-562X

VL - 58

SP - 95

EP - 108

JO - Journal of Productivity Analysis

JF - Journal of Productivity Analysis

IS - 1

ER -

Investment Inefficiency and Corporate Social Responsibility

Abstract

Keywords

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