Corporate social responsibility and stakeholder value maximization: Evidence from mergers

Journal of Financial Economics

Volumn 110, Issue 1, 2013, Pages 87-109

  Deng, Xin ^a   Kang, Jun koo ^b   Low, Buen Sin ^b  

^a SHANGHAI UNIVERSITY OF FINANCE AND ECONOMICS   (China)

^b NANYANG TECHNOLOGICAL UNIVERSITY   (Singapore)

Author keywords

Announcement return; Corporate social responsibility (CSR); Merger; Nexus of contract; Stakeholder theory

Indexed keywords

EID: 84883288801     PISSN: 0304405X     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jfineco.2013.04.014     Document Type: Article

References (87)

1. Adolph G., Buchanan I., Hornery J., Jackson B., Jones J., Kihlstedt T., Neilson G., Quarls H. Merger integration: delivering on the promise. Research Summary 2001, Booz Allen Hamilton, Tysons Corner, VA.
2. Agrawal A., Jaffe J., Mandelker G. The post-merger performance of acquiring firms: a reexamination of an anomaly. Journal of Finance 1992, 47:1605-1621.
3. Aktas N., Bodt E.D., Cousin J.-G. Do financial markets care about SRI? Evidence from mergers and acquisitions. Journal of Banking and Finance 2011, 35:1753-1761.
4. Alchian A.A., Demsetz H. Production, information costs, and economic organization. American Economic Review 1972, 62:777-795.
5. Angelidis J., Ibrahim N. An exploratory study of the impact of degree of religiousness upon an individual's corporate social responsiveness orientation. Journal of Business Ethics 2004, 51:119-128.
6. Aupperle K., Carroll A.B., Hatfield J.D. An empirical examination of the relationship between corporate social responsibility and profitability. Academy of Management Journal 1985, 28:446-463.
7. Bae K.-H., Kang J.-K., Wang J. Employee treatment and firm leverage: a test of the stakeholder theory of capital structure. Journal of Financial Economics 2011, 100:130-153.
8. Bauer R., Koedijk K., Otten R. International evidence on ethical mutual fund performance and investment style. Journal of Banking and Finance 2005, 29:1751-1767.
9. Bekier M.M., Bogardus A.J., Oldham T. Why mergers fail. McKinsey Quarterly 2001, 4:6-9.
10. Bessembinder H., Kahle K.M., Maxwell W.F., Xu D. Measuring abnormal bond performance. Review of Financial Studies 2010, 22:4219-4258.
11. Billett M.T., King T-H.D., Mauer D.C. Bondholder wealth effects in mergers and acquisitions: new evidence from the 1980s and 1990s. Journal of Finance 2004, 59:107-135.
12. Bradley M., Desai A., Kim E.H. Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms. Journal of Financial Economics 1988, 21:3-40.
13. Brammer S., Brooks S., Pavelin S. Corporate social performance and stock returns: UK evidence from disaggregate measures. Financial Management 2006, 35:97-116.
14. Byrd J.J., Hickman K.A. Do outside directors monitor managers?. Journal of Financial Economics 1992, 32:195-221.
15. Carhart M. On persistence in mutual fund performance. Journal of Finance 1997, 52:57-82.
16. Chen H.J., Kacperczyk M.T., Ortiz-Molina H. Do nonfinancial stakeholders affect the pricing of risky debt? Evidence from unionized workers. Review of Finance 2012, 16:347-383.
17. Chen X., Harford J., Li K. Monitoring: which institutions matter?. Journal of Financial Economics 2007, 86:279-305.
18. Cheng, B., Ioannou, I., Serafeim, G., Corporate social responsibility and access to finance. Strategic Management Journal. in press. http://dx.doi.org/10.1002/smj.2131.
19. Coase R.H. The nature of the firm. Economica 1937, 4:386-405.
20. Cochran P.L., Wood R.A. Corporate social responsibility and financial performance. Academy of Management Journal 1984, 27:42-56.
21. Comprix J., Muller K.A. Pension plan accounting estimates and the freezing of defined benefit pension plans. Journal of Accounting and Economics 2011, 51:115-133.
22. Core J., Guay W. Estimate the value of employee stock option portfolios and their sensitivities to price and volatility. Journal of Accounting Research 2002, 40:613-630.
23. Cornell B., Shapiro A.C. Corporate stakeholder and corporate finance. Financial Management 1987, 16:5-14.
24. Cragg J.G., Donald S.G. Testing identifiability and specification in instrumental variable models. Econometric Theory 1993, 9:222-240.
25. Cronqvist H., Heyman F., Nilsson M., Svaleryd H., Vlachos J. Do entrenched managers pay their workers more?. Journal of Finance 2009, 64:309-339.
26. Datta S., Iskandar-Datta M., Raman K. Executive compensation and corporate acquisition decisions. Journal of Finance 2001, 56:2299-2336.
27. Dell, D., Hexter, E., Wesman, P., 2001. Merging and acquiring for growth. Conference Board, NY, New York.
28. Edmans A. Does the stock market fully value intangibles? Employee satisfaction and equity prices. Journal of Financial Economics 2011, 101:621-640.
29. Edmans A. The link between job satisfaction and firm value, with implications for corporate social responsibility. Academy of Management Perspectives 2012, 26:1-19.
30. Edmans A., Gabaix X., Landier A. A multiplicative model of optimal CEO incentives in market equilibrium. Review of Financial Studies 2009, 22:4881-4917.
31. Fama E. Market efficiency, long-term returns, and behavioral finance. Journal of Financial Economics 1998, 49:283-306.
32. Fama E., French K. The cross section of expected stock returns. Journal of Finance 1992, 47:427-465.
33. Fama E., French K. Common risk factors in the returns on stocks and bonds. Journal of Financial Economics 1993, 33:3-56.
34. Fama E., French K. Industry costs of equity. Journal of Financial Economics 1997, 43:153-193.
35. Fee E., Thomas S. Sources of gains in horizontal mergers: evidence from customer, supplier, and rival firms. Journal of Financial Economics 2004, 74:423-460.
36. Freeman R.E., Wicks A.C., Parmar B. Stakeholder theory and 'the corporate objective revisited. Organization Science 2004, 15:364-369.
37. Friedman M. The social responsibility of business is to increase its profits. Perspectives in Business Ethics 1998, 246-251. McGraw-Hill, Singapore. L.B. Pincus (Ed.).
38. Gompers P., Ishii J., Metrick A. Corporate governance and equity prices. Quarterly Journal of Economics 2003, 118:107-155.
39. Harford J. What drives merger waves. Journal of Financial Economics 2005, 77:529-560.
40. Hart O.D. The market mechanism as an incentive scheme. Bell Journal of Economics 1983, 14:366-382.
41. Healy P.M., Palepu K.G., Ruback R.S. Does corporate performance improve after mergers?. Journal of Financial Economics 1992, 31:135-175.
42. Heckman J. Sample selection bias as a specification error. Econometrica 1979, 47:153-161.
43. Heckman J., Ichimura H., Todd P. Matching as an econometric evaluation estimator: evidence from evaluating a job training program. Review of Economic Studies 1997, 64:605-654.
44. Heckman J., Ichimura H., Todd P. Matching as an econometric evaluation estimator. Review of Economic Studies 1998, 65:261-294.
45. Hill C.W.L., Jones T.M. Stakeholder-agency theory. Journal of Management Studies 1992, 29:131-154.
46. Hoberg G., Phillips G. Product market synergies and competition in mergers and acquisitions: a text-based analysis. Review of Financial Studies 2010, 23:3773-3811.
47. Hong H., Kacperczyk M. The price of sin: the effects of social norms on markets. Journal of Financial Economics 2009, 93:15-36.
48. Ikenberry D., Lakonishok J., Vermaelen T. Stock repurchases in Canada: performance and strategic trading. Journal of Finance 2000, 55:2373-2397.
49. Ioannou, I., Serafeim, G., 2010. The impact of corporate social responsibility on investment recommendations. Unpublished working paper. London Business School and Harvard Business School, London, England, and Boston, MA.
50. Jawahar I.M., McLaughlin G.L. Toward a descriptive stakeholder theory: an organizational life cycle approach. Academy of Management Review 2001, 26:397-414.
51. Jensen M.C. Value maximization, stakeholder theory, and the corporate objective function. Journal of Applied Corporate Finance 2001, 14:8-21.
52. Jensen M.C., Meckling W.H. Theory of the firm: managerial behavior, agency costs, and ownership structure. Journal of Financial Economics 1976, 3:305-360.
53. Jiao Y. Stakeholder welfare and firm value. Journal of Banking and Finance 2010, 34:2549-2561.
54. Kelly J., Cook C., Spitzer D. Unlocking shareholder value: keys to success. Mergers and Acquisitions-Global Research Report 1999, 2-4. KPMG, New York, NY. KPMG (Ed.).
55. Kearney A.T. Corporate marriage: blight or bliss? A monograph on post-merger integration 1999, A.T. Kearney, Chicago, IL.
56. Kreander N., Gray G., Power D.M., Sinclair C.D. Evaluating the performance of ethical and non-SRI funds: a matched pair analysis. Journal of Business, Finance, and Accounting 2005, 32:1465-1493.
57. Lang L., Stulz R.M., Walkling R.A. Managerial performance, Tobin's q, and the gains from successful tender offers. Journal of financial Economics 1989, 24:137-154.
58. Lee P., Wahal S. Grandstanding, certification, and the underpricing of venture capital backed IPOs. Journal of Financial Economics 2004, 73:375-407.
59. Lev, B., Petrovits, C., Radhakrishnan, S., 2008. Is doing good for you? How corporate charitable contributions enhance revenue growth. Unpublished working paper. New York University, NY, New York.
60. Loughran T., Ritter J.R. Why has IPO underpricing changed over time?. Financial Management 2004, 33:5-37.
61. Manescu, C., 2009. Is corporate social responsibility viewed as a risk factor? Evidence from an asset pricing analysis. Unpublished working paper. University of Gothenburg, Gothenburg, Sweden.
62. Margolis J.D., Walsh J.P. People and Profits? The Search for a Link between a Company's Social and Financial Performance 2001, Psychology Press, Mahwah, NJ.
63. Masulis R.W., Wang C., Xie F. Corporate governance and acquirer returns. Journal of Finance 2007, 62:1851-1889.
64. McGuire J.B., Sundgren A., Schneeweis T. Corporate social responsibility and firm financial performance. Academy of Management Journal 1988, 31:854-872.
65. McWilliams A., Siegel D. Corporate social responsibility and financial performance: correlation or misspecification?. Strategic Management Journal 2000, 21:603-609.
66. McWilliams A., Siegel D., Teoh S.H. Issues in the use of the event study methodology: a critical analysis of corporate social responsibility studies. Organizational Research Methods 1999, 2:350-372.
67. Mitchell M.L., Mulherin J.H. The impact of industry shocks on takeover and restructuring activity. Journal of Financial Economics 1996, 41:193-229.
68. Moeller S.B., Schlingemann F.P., Stulz R.M. Firm size and the gains from acquisitions. Journal of Financial Economics 2004, 73:201-228.
69. Morck R., Shleifer A., Vishny R.W. Do managerial incentives drive bad acquisitions?. Journal of Finance 1990, 45:31-48.
70. New York Times Magazine, 1970. The Social Responsibility of Business is to Increase its Profits. M. Friedman, September 13.
71. Nickell S. Competition and corporate performance. Journal of Political Economy 1996, 104:724-746.
72. Pagano M., Volpin P.F. Managers, workers, and corporate control. Journal of Finance 2005, 60:841-868.
73. Posnikoff J.F. Divestment from South Africa: they did well by doing good. Contemporary Economic Policy 1997, 15:76-86.
74. Renneboog L., Horst J., Zhang C. Socially responsible investments: institutional aspects, performance, and investor behavior. Journal of Banking and Finance 2008, 32:1723-1742.
75. Roberts M.R., Whited T.M. Endogeneity in empirical corporate finance. Handbook of the Economics of Finance 2013, 493-572. Elsevier, Amsterdam, Netherlands. G. Constantinides, M. Harris, R. Stulz (Eds.).
76. Rubin A. Political views and corporate decision making: the case of corporate social responsibility. Financial Review 2008, 43:337-360.
77. Sargan J.D. The estimation of economic relationships with instrumental variables. Econometrica 1958, 26:393-415.
78. Shleifer A., Summers L. Breach of trust in hostile takeovers. Corporate Takeovers: Causes and Consequences 1988, 33-56. University of Chicago Press, Chicago, IL. A.J. Auerbach (Ed.).
79. Simmons C.J., Becker-Olsen K.L. Achieving marketing objectives through social sponsorships. Journal of Marketing 2006, 70:154-169.
80. Smith J., Todd P. Does matching overcome LaLonde's critique of nonexperimental estimators?. Journal of Econometrics 2005, 125:305-353.
81. Statman M. Socially responsible mutual funds. Financial Analysts Journal 2000, 56:30-39.
82. Surroca J., Tribo J.A. Managerial entrenchment and corporate social performance. Journal of Business Finance and Accounting 2008, 35:748-789.
83. Teoh S.H., Welch I., Wazzan C.P. The effect of socially activist investment policies on the financial markets: evidence from the South African boycott. Journal of Business 1999, 72:35-89.
84. Vance S. Are socially responsible firms good investment risks?. Management Review 1975, 64:18-24.
85. Waddock S., Graves S. The corporate social performance-financial performance link. Strategic Management Journal 1997, 18:303-319.
86. Wang C., Xie F. Corporate governance transfer and synergistic gains from mergers and acquisitions. Review of Financial Studies 2009, 22:829-858.
87. Wright P., Ferris S. Agency conflict and corporate strategy: the effect of divestment on corporate value. Strategic Management Journal 1997, 18:77-83.