Behavioral ethics research has focused predominantly on how the attributes of individuals influence their ethicality. Relatively neglected has been how macro-level factors such as the behavior of firms influence members’ ethicality. Researchers have noted specifically that we know little about how a firm’s CSR influences members’ behaviors. We seek to better merge these literatures and gain a deeper understanding of the role macro-level influences have on manager’s ethicality. Based on agency theory and social identity theory, we hypothesize that a company’s (...) commitment to CSR shifts managers’ focus away from self-interests toward the interests of the firm, bolstering resistance to temptation. We propose this occurs through self-categorization and collective identification processes. We conduct a 2 × 2 factorial experiment in which managers make expense decisions for a company with commitment to CSR either present or absent, and temptation either present or absent. Results indicate that under temptation, managers make decisions consistent with self-interest. More importantly, we find when commitment to CSR is present, managers are more likely to make ethical decisions in the presence of temptation. Overall, this research highlights the interactive role of two key contextual factors—temptation and firm CSR commitment—in influencing managers’ ethical decisions. While limited research has highlighted the positive effects that a firm’s CSR has on its employees’ attitudes, the current results demonstrate CSR’s effects on ethical behavior and imply that through conducting and communicating its CSR efforts internally, firms can in part limit the deleterious effects of temptation on managers’ decisions. (shrink)

Firms are under increasing pressure from external forces to do what is right and behave ethically. However, we have only a limited understanding of how ethical and responsible business practices impact the value of the firm, both in the short and the long term. In this study, we examine 196 firms that were recognized as the world's most ethical firms from 20 countries over a 14-year span. Results show that ethical behavior may have little effect on a firm's profitability in (...) the short term. However, it has a positive effect on a firm's market value, reflecting the market's positive assessment of its long-term performance. We also find that firms frequently listed among the world's most ethical companies tend to have higher market value than firms listed only once. (shrink)

This study examines the relationship between corporate social responsibility -related information and the value of financial analysts’ stock recommendations. The information environment in which analysts operate in is affected by CSR-related reports that companies voluntarily issue as well as information that becomes available through third-party analysis and rating institutions. We find an inverse relationship between the value of both upgrade and downgrade revisions and the supply of CSR-related information compiled by third-party institutions, suggesting that CSR-related data are associated with a (...) richer information environment that makes it more challenging for analysts to issue informative recommendations, thereby mitigating their contribution to the price discovery process. We further find that the value of analysts’ recommendation revisions is lower for companies that voluntarily issue CSR-related reports compared to those that do not make such disclosures and that the overall effect of CSR on the informativeness of analysts is stronger in the recent years. Our findings have implications for the evolution of CSR reporting as the incorporation of CSR-related information into market prices legitimizes the relevance of such reports. Furthermore, these findings contribute to our understanding of the role and value of information intermediaries in changing information environments. (shrink)

We analyze the relationship between corporate social responsibility and the stock market performance in the post-global financial crisis period. A new measure of social responsibility by Thomson Reuters, called the ESG Combined Score, is used. As a novel feature of our analysis, socially responsible engagement is divided into the strategic activities closely related to the examined companies’ core business and the remaining secondary activities. The results of the fixed effects regression show a positive and statistically, as well as economically, significant (...) impact of the strategic activities on the corporate stock market performance of companies. This impact is up to 103% higher compared to the secondary activities. The empirical results suggest that if companies aim to increase their share prices via the corporate social responsibility channel, they should strategically select their socially responsible initiatives. (shrink)

Accountability for corporate social responsibility (CSR) and its societal challenges is undetermined, and it is unclear whether business or society should carry these responsibilities. Despite severe criticism from some, many organizations continue to invest in and promote CSR. The purpose of this multiple-case study was to increase the understanding of the phenomenon from the perspective of a purposeful sample of participants who contribute to CSR execution and who were representatives of the 10 organizations identified as active promoters. The participant corporations (...) (case studies), in Europe and North America, were mainly in the telecommunications industry. Study data came from 11 face-to-face, semistructured interviews with chief executive officers (CEOs) and other CSR key participants, a review of corporate archival records, and a review of other sources regarding the effective implementation of CSR in these organizations. The conceptual framework consisted of Carroll’s constructs of CSR based on economic, legal, social, and discretionary elements. The constant comparative method was used to analyze the interview data and identify factors leading corporations to continue to engage in CSR. These factors were economic, social impact, legal compliance, or good reputation, sponsored by transformational or adaptive leaderships and endorsed by visionary CEOs. The findings may enlighten and motivate other organizations to engage in CSR programs and connect stakeholders’ contribution to a broadened positive social change. (shrink)