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Monday, Sep 27, 2010Corporate Governance and CSR Nexus Explored
Posted by dgore
RESEARCH
Professor Harjoto Published in Esteemed Journal of Business Ethics
By Jaime Quigley
Graziadio professor’s paper researches over-investment, strategic-choice, product-signaling and conflict-resolution in Corporate Governance and Corporate Social Responsibility Nexus.
Motivations behind corporate social responsibility (CSR) can carry complicated personal and political forces, some would argue, including Graziadio School finance professor Augus Harjoto.
Managers may over-invest in CSR activities to foster a favorable public image as responsible executives and citizens. And it’s argued that CEOs tactically demonstrate CSR as a means to reducing CEO turnover as a result of unpopularity among activists. And most purely, CSR can be used as an effort to signal product quality, according to the co-authored study, “Corporate Governance and Corporate Social Responsibility Nexus.” The 36-page work was recently accepted for publication by the Journal of Business Ethics.
Harjoto and co-author Hoje Jo of Santa Clara University find that when managers use CSR activities to resolve conflicts between managers and various stakeholders, CSR engagement enhances firm value and performance. Findings reveal that examining the impact of CSR on firm value/performance should be done based on the fact that CSR engagement is endogenously determined by corporate governance and managerial entrenchment measures.
Harjoto empirically tests the governance-CSR nexus based on four competing hypotheses: over-investment, strategic-choice, product-signaling and conflict-resolution. Later, by using a two-stage approach, he attempts to find the factual relationship among CSR, governance, and firm value/performance.
“This paper defines the relationship of CSR, governance, firm value/performance as the governance-CSR nexus,” Harjoto states. “It attempts to fill the void by examining the determinants of CSR engagement and whether CSR engagement along with corporate governance mechanisms enhances firm performance and value using a comprehensive sample of firms with and without CSR engagement.”
For his previous ground-breaking research on corporate social responsibility and its impact on financial performance, Harjoto won the prestigious 2009 Moskowitz Prize for Socially Responsible Investing, the only global award recognizing outstanding quantitative research in the field of socially responsible investing.
The Journal of Business Ethics publishes original articles from a wide variety of methodological and disciplinary perspectives concerning ethical issues related to business that bring something new or unique to the discourse in their field, according to the publication. Contributors examine moral aspects of systems of production, consumption, marketing, advertising, social and economic accounting, labor relations, public relations and organizational behavior.
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